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Mr. Gregory White, Master's Degree
Category: Single Problem
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Experience:  M.A., M.S. Education / Educational Administration
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# Hicks Health Clubs, Inc., has \$10,000,000 in assets. If it

### Customer Question

Hicks Health Clubs, Inc., 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 conservative asset-financing mix.
Select one:
A. \$50,000
B. \$100,000
C. \$200,000
D. \$700,000
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Submitted: 11 months ago.
Category: Single Problem
Expert:  Mr. Gregory White replied 11 months ago.
Hello, my name is GregAnswer: \$100,000SolutionSolution: (10000000*0.10)-(1000000*0.09)=100,000