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Liquidity-Financing Alternatives Assume that Eagle Sporting Goods has $500,000 in assets. If it goes with a low liquidity plan for the assets it can earn
Liquidity-Financing Alternatives Assume that Eagle Sporting Goods has $500,000 in assets. If it goes with a low liquidity plan for the assets it can earn a return of 15.00 percent, but with a high liquidity plan the return will be 12.00 percent. If the firm goes with a short-term financing plan, the financing costs on the $500,000 will be 5.00 percent; with a long-term financing plan the financing costs will be 6.00 percent. Required: Compute the anticipated return (in dollars) for each of the following Liquidity/Financing mixes: Low Liquidity Quadrant 1 High Liquidity Quadrant 2 Short-term Financing Plan Quadrant 3 Quadrant 4 Long-term Which quadrant would be considered the most aggressive liquity/financing mix? (Click to select) Which quadrant would be considered the most conservative liquity/financing mix? (Click to select)
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