Table 14.2 The company earns 5 percent on current assets and 15 percent on fixed assets.The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-If the firm was to shift $2,000 of current liabilities to long-term funds,the firm's net working capital would ________,the annual cost of financing would ________,and the risk of insolvency would ________,respectively.(See Table 14.2)

Question

Table 14.2  The company earns 5 percent on current assets and 15 percent on fixed assets.The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-If the firm was to shift $2,000 of current liabilities to long-term funds,the firm's net working capital would ________,the annual cost of financing would ________,and the risk of insolvency would ________,respectively.(See Table 14.2)

Quizplus · Accepted Answer

The Answer of Table 14.2  The company earns 5 percent on current assets and 15 percent on fixed assets.The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-If the firm was to shift $2,000 of current liabilities to long-term funds,the firm's net working capital would ________,the annual cost of financing would ________,and the risk of insolvency would ________,respectively.(See Table 14.2)

Table 142 the Company Earns 5 Percent on Current Assets