Answer:
A. Anticipated return= $62,400
B. Anticipated return= $20,800
C. Low liquidity Anticipated return=$52,000
High liquidity Anticipated return=$31,200
Explanation:
a. Computation for the anticipated return after financing costs with the most aggressive asset-financing mix.
Anticipated return=($1,040,000*14%)-($1,040,000*8%)
Anticipated return= $145,600-$83,200
Anticipated return= $62,400
b. Computation for the anticipated return after financing costs with the most conservative asset-financing mix.
Anticipated return=($1,040,000*11%)-($1,040,000*9%)
Anticipated return= $114,400-$93,600
Anticipated return= $20,800
c. Computation for the anticipated return after financing costs with the two moderate approaches to the asset-financing mix.
Anticipated Return
Low liquidity =($1,040,000*14%)-($1,040,000*9%)
Low liquidity =$145,600-$93,600
Low liquidity =$52,000
High liquidity =($1,040,000*11%)-($1,040,000*8%)
High liquidity =$114,400-$83,200
High liquidity =$31,200
