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Mr. Gregory White
Mr. Gregory White, Master's Degree
Category: Single Problem
Satisfied Customers: 5230
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: 6 months ago.
Category: Single Problem
Expert:  Mr. Gregory White replied 6 months ago.
Hello, my name is GregAnswer: $100,000SolutionSolution: (10000000*0.10)-(1000000*0.09)=100,000

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