Reference no: EM131360880
Lily's Luxuries has complied several factors relative to its financing mix. The firm pays 8% on short-term funds and 10% on long-term funds. The firms monthly current, fixed and total assets requirements for the previous year are summarized below:
Month Current Assets Fixed Assets Total Assets
Jan. $125,000 $250,000 $375,000
Feb. $130,000 $250,000 $380,000
March. $135,000 $250,000 $385,000
April $150,000 $250,000 $400,000
May $150,000 $250,000 $400,000
June $125,000 $250,000 $375,000
July $115,000 $250,000 $365,000
August $120,000 $250,000 $370,000
Sept. $115,000 $250,000 $365,000
Oct. $100,000 $250,000 $350,000
Nov. $110,000 $250,000 $360,000
Dec. $115,000 $250,000 $365,000
(a) the monthly average permanent funds requirement
(b) the monthly average seasonal funds requirement
(c) the annual financing costs (permanent strategy)
(d) the annual financing cost (variable strategy)
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The monthly average seasonal funds requirement
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Considering three-year project with an initial cost
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