I have completed the first 4 questions, i just need you to solve e1 and...

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Accounting

I have completed the first 4 questions, i just need you to solve e1 and e2 and give me an explanation of how you did it please.

Thank you

Assume that Atlas Sporting Goods Incorporated has $890,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 13 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 $890,000 will be 7 percent, and with a long-term financing plan the financing costs on the $890,000 will be 8 percent.

a. Compute the anticipated return after financing costs with the most aggressive asset-financing mix.

53400

b. Compute the anticipated return after financing costs with the most conservative asset-financing mix.

17800

c. Compute the anticipated return after financing costs with the two moderate approaches to the asset-financing mix.

low-44500

high-26700

d. If the firm used the most aggressive asset-financing mix described in part a and had the anticipated return you computed for part a, what would earnings per share be if the tax rate on the anticipated return was 30 percent and there were 20,000 shares outstanding?

Note: Round your answer to 2 decimal places.

1.87

e-1. Now assume the most conservative asset-financing mix described in part b will be utilized. The tax rate will be 30 percent. Also assume there will only be 5,000 shares outstanding. What will earnings per share be?

Note: Round your answer to 2 decimal places.

e-2. Would the conservative mix have higher or lower earnings per share than the aggressive mix?

multiple choice

Lower

Higher

Answer & Explanation Solved by verified expert
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