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The Langley Corp is in a seasonal business. It requires a permanent base of net working capital of $10 M all year long, but that
The Langley Corp is in a seasonal business. It requires a permanent base of net working capital of $10 M all year long, but that requirement temporarily increases to $20 M during a four-month period each year. Langley has 3 financing options for net working capital. Calculate the corst of each option. Round to the nearest dollar. A: Finance the peak level year round with equity, which costs 19% and invest temporarily unused funds in marketable securities which earn 6.1% B: Finance permanent net working capital with equity and temporary net working capital with a short-term loan at 12% C: Finance all net working capital needs with short-term debt at 12.5% Calculate the cost of each option, which one woudl you pick
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