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Christensen & Assoc. is developing an asset financing plan. Christensen has $650,000 in current assets,...

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Christensen & Assoc. is developing an asset financing plan. Christensen has $650,000 in current assets, of which 25% are permanent, and $820,000 in capital assets. The current long-term rate is 8%, and the current short-term rate is 4%. Christensen's tax rate is 30%. Required o 1. Construct three financing plans perfectly hedged o conservative, with 80% of assets financed by long-term sources aggressive, with only 60% of assets financed by long-term sources. 2. If Christensen's earnings before interest and taxes are $325,000, calculate net income under each alternative. 3. Which plan would you recommend to Christensen? Why? o

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