Aggressive vs. conservative financing strategy. Benitez Industrial Services Corp. has a short-term funds cost of 7% and a long-term funds cost of 12%. A summary forecast of the company's total assets during the coming year is as follows.
Month Amount Month Amount
January $ 8,900,000 July $ 10,500,000
February 8,500,000 August 10,000,000
March 8,700,000 September 9,600,000
April 9,200,000 October 9,400,000
May 9,800,000 November 9,000,000
June 10,300,000 December 9,000,000
- Divide the company's financing needs into permanent and seasonal components. Calculate the average seasonal financing need.