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Land Recovery is investigating several forms of financing assets. The organization's income tax rate is 40%. Assume the organization has decided to use $30 million in current assets and $35 million in fixed assets in it operations next year, with EBIT ($6 million), and anticipated sales ($60 million). 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 ShortTerm Debt (Millions) LTD (%) STD (%)
Option 1 $24 8.5 5.5
Option 2 $18 8.0 5.0
Option 3 $12 7.5 4.5

Determine the following or each policy:
Current ratio
Net Working capital position
Expected rate of return on stockholders' equity  

Reference no: EM13655574

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