Explore BrainMass
Share

Expected return for an aggressive mix

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

A firm has $10,000,000 in assets. If it goes with a low liquidity plan for the assets, it can earn a return of 15 percent, but with a high liquidity plan, the return will be 10 percent. If the firm goes with a short-term financing plan, the financing costs on the $10,000,000 will be 8 percent, and with a long-term financing plan, the financing costs on the $10,000,000 will be 9 percent. Compute the anticipated return after financing costs on the most aggressive asset-financing mix.

© BrainMass Inc. brainmass.com September 25, 2018, 2:56 pm ad1c9bdddf - https://brainmass.com/business/the-marketing-mix/expected-return-for-an-aggressive-mix-223507

Solution Preview

A firm has $10,000,000 in assets. If it goes with a low liquidity plan for the assets, it can earn a return of 15 percent, but with a high liquidity plan, the return will be 10 percent. If the firm goes with a short-term financing plan, the financing costs on the $10,000,000 will be 8 percent, and with a ...

Solution Summary

Response describes the steps to compute the expected return for an aggressive mix

$2.19