Laserscope Inc. is trying to determine the best combination of short-term debt (STD) and long-term debt (LTD) to employ in financing its assets. Laserscope will have $16 million in current assets and $20 million in fixed assets next year and expects operating income (EBIT) to be $4.1 million. The company's tax rate is 40% and its debt-to-asset ratio is 50%. The firm's debt will be financed by one of the following policies: Aggressive Policy Conservative Policy Short term debt $12 million $6 million Interest rate--Long-term Debt 11.0% 10.3% Interest rate--Short-term Debt 7.5% 7.0% REQUIRED: What is the return on shareholders equity under each policy?

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