The the anticipated return after financing cost with the most aggressive asset financing mix is $200000.
<u>Most aggressive</u>
Low liquidity = $2,500,000 *18%
Low liquidity = $450,000
Short-term financing = -$2,500,000*10%
Short-term financing = -$250,000
Anticipated return = $450,000 + (-$250,000)
Anticipated return = $200,000
<u>Most conservative</u>
High liquidity = $2,500,000 *14%
High liquidity = $350,000
Long-term financing = –$2,500,000 * 12%
Long-term financing = -$300,000
Anticipated return = $350,000 + (-$300,000)
Anticipated return = $50,000
<u>Moderate approach</u>
Low liquidity = $2,500,000 *18%
Low liquidity = $450,000
Long-term financing =–$2,500,000 * 12%
Long-term financing = -$300,000
Anticipated return = $450,000 + (-$300,000)
Anticipated return = $150,000
<u>Moderate approach</u>
High liquidity = $2,500,000 *14%
High liquidity = $350,000
Short-term financing = -$2,500,000*10%
Short-term financing = -$250,000
Anticipated return = $350,000 + (-$250,000)
Anticipated return = $100,000
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Complete question:
a. Compute the anticipated return after financing cost with the most aggressive asset financing mix.
b. Compute the anticipated return after financing cost with the most conservative asset financing mix.
c. Compute the anticipated return after financing cost with the two moderate approaches to the asset financing mix.