Quarter Current Assets Fixed Assets
I $425000 $1315000
II $365000 $1315000
III $395000 $1315000
IV $205000 $1315000
Woozle Industries has the expected current and fixed asset requirements listed above for each of
the next four quarters:
Determine the level of long-term permanent funding the average short term seasonal funding and the average level of excess funding
under an aggressive working capital financing strategy.
Determine the level of long-term permanent funding the average short term seasonal funding and the average level of excess funding
under a conservative working capital financing strategy.
Using your answers for (a) and (b) determine total net interest cost for each strategy given that long-term financing carries a cost of 9.5% short-term debt carries an interest rate of 4.5% and any excess funds can be invested at a rate of 1.25%.