Question 2 of 8 This question: 1 point(s) possible Aggressive versus conservative seasonal funding strategy Dynabase Tool has forecast its total funding requirements for the coming year as shown in the following table: 2000000 July 2000000 August 2000000 September 3000000 October 5000000 November 8000000 December 11000000 15000000 9000000 6000000 3000000 5000000 a. Divide the firm's monthly funding requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that under the aggressive strategy, long-term funds finance permanent needs and short-term funds are used to finance seasonal needs. C. Assuming that short-term funding costs 5% annually and that the cost of long-term funding is 10% annually, use the averages found in part a to calculate the total cost of each of the strategies described in part b. Assume that the firm can earn 3% on any excess cash balances. d. Discuss the profitability-risk trade-offs associated with the aggressive strategy and those associated with the conservative strategy. a. Divide the firm's monthly funding requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. 1 January 2 February 3 March 4 April 5 May 6 June 7 8 8 9 10 11 12 13 14 15 16 17 18 C. 19 20 The monthly average of the firm's permanent funding requirement is $ (Round to the nearest dollar.) The monthly average of the firm's seasonal funding requirement is $ (Round to the nearest dollar.) b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. If Dynabase employs an aggressive funding strategy, the amount it will fund with short-term debt is $ (Round to the nearest dollar.) 21 22 22 23 24 25 26 27 28 29 30 31 32 33 34 35 If Dynabase employs an aggressive funding strategy, the amount it will fund with long-term debt is $ (Round to the nearest dollar) Question 2 of 8 This question: 1 point(s) possible Aggressive versus conservative seasonal funding strategy Dynabase Tool has forecast its total funding requirements for the coming year as shown in the following table: 2000000 July 2000000 August 2000000 September 3000000 October 5000000 November 8000000 December 11000000 15000000 9000000 6000000 3000000 5000000 a. Divide the firm's monthly funding requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that under the aggressive strategy, long-term funds finance permanent needs and short-term funds are used to finance seasonal needs. C. Assuming that short-term funding costs 5% annually and that the cost of long-term funding is 10% annually, use the averages found in part a to calculate the total cost of each of the strategies described in part b. Assume that the firm can earn 3% on any excess cash balances. d. Discuss the profitability-risk trade-offs associated with the aggressive strategy and those associated with the conservative strategy. a. Divide the firm's monthly funding requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. 1 January 2 February 3 March 4 April 5 May 6 June 7 8 8 9 10 11 12 13 14 15 16 17 18 C. 19 20 The monthly average of the firm's permanent funding requirement is $ (Round to the nearest dollar.) The monthly average of the firm's seasonal funding requirement is $ (Round to the nearest dollar.) b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. If Dynabase employs an aggressive funding strategy, the amount it will fund with short-term debt is $ (Round to the nearest dollar.) 21 22 22 23 24 25 26 27 28 29 30 31 32 33 34 35 If Dynabase employs an aggressive funding strategy, the amount it will fund with long-term debt is $ (Round to the nearest dollar)
