Fin419 Principles of Managerial Finance: Scott Equipment Organization is investigating various

Fin419 Principles of Managerial Finance Week 4 Individual Assignment Scott Equipment Organization Paper (Excel Format) Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $35 million in fixed assets in its operations next year, provided the level of current assets, anticipated sales, and EBIT for next year are $60 million and $6 million, respectively. The organization’s income tax rate is 40%. Stockholders’ equity will be used to finance $40 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies in the diagram. Amount of Short-Term Debt Financial Policy Millions of dollars LTD (%) STD (%) Aggressive $24 8.5% 5.5% (large amount of short-term debt) Moderate $18 8.0% 5.0% (moderate amount of short-term debt) Conservative $12 7.5% 4.5% (small amount of short-term debt) Determine the following for each policy: · Expected rate of return on stockholders’ equity · Net working capital position · Current ratio