Conservative and Aggressive Financing Plans Christensen & Associates is development an asset…

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Conservative and Aggressive Financing Plans Christensen & Associates is development an asset

financing plan Christensen has $500,000 in current assets of which 15% are

permanent, and $700,000 in fixed assets The current long-term rate is 11%, and

the current short-term rate is 85% Christensen’s tax rate is 40%

Show a financing plan, conservative, with 80% of assets
financed by long-term sources

Show a financing plan, aggressive, with only 60% of assets
financed financed by long-term sources

If Christensen’s earnings before interest and taxes are
$325,000, what would be the net income under a aggressive plan? under a
conservative plan? What could be the risks associated with the aggressive plan?
the conservative plan?

Which plan would be recommendable by the CFO of Christensen?
Why?

 
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