Tiffany has $1,000,000 in current assets, of… Show more Ti

Assignment Help Finance Tiffany has $1,000,000 in current assets, of… Show more Ti

Finance

Tiffany has $1,000,000 in current assets, of… Show more Ti

Tiffany has $1,000,000 in current assets, of… Show more Tiffany & Assoc. is devolping an asset financing plan. Tiffany has $1,000,000 in current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 9%, and the current short-term rate is 6.5%. Tiffany & Assoc. tax rate is 30%. a. Construct two financing plans-one conservative, with 80% of assets financed by long-term sources, and the other aggresive, with only 60% of assets financed by long-term sources. If Tiffany’s earnings before interest and taxes are $525,000, calculate net income under each alternative. b. What are some of the risks associated with each plan? c. If the yeild curve is steeply inverted, which financing plan should Tiffany’s choose? • Show less

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