Please show your work for the below 3 questions: Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than…

Please show your work for the below 3 questions:1. Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of returns? A. $28,800B. $4,000C. $4,800D. $35,2002. Hicks Health Clubs, Inc., expects to generate an annual EBIT of $500,000 and needs to obtain financing for $1,000,000 of assets. Their tax bracket is 40%. If the firm goes with a short-term financing plan, their rate will be 8 percent, and with a long-term financing plan their rate will be 9 percent. What much more or less will their initial annual earnings after taxes be if they choose the most conservative financing plan? 3. Christensen & Assoc. is developing an asset financing plan. Christensen has $500,000 in current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 11%, and the current short-term rate is 8.5%. Christensen’s tax rate is 40%. a) Construct two financing plans–one conservative, with 80% of assets financed by long-term sources, and the other aggressive, with only 60% of assets financed by long-term sources.b) If Christensen’s earnings before interest and taxes are $325,000, calculate net income under each alternative.c) What are some of the risks associated with each plan?d) If the yield curve is steeply inverted, which financing plan should Christensen choose?

1. Under normal conditions (70% probability), Financing Plan A will produce $24,000higher return than Plan B. Under tight money conditions (30% probability), Plan A willproduce $40,000 less than…

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