Scott Equipment Organization is investigating variouscombinations of short- and

Scott Equipment Organization is investigating variouscombinations of short- and long-term debt in financing assets.Assume the organization has decided to employ $10 million incurrent assets and $15 million in fixed assets in its operationsnext year and EBIT for next year is $8 million. The organizationsincome tax rate is 40%. Stockholders equity will be used tofinance $15 million of assets with the remainder financed byshort- and long-term debt. The organization is consideringimplementing one of the policies below.