The Calgary Company is attempting to establish a current assets policy. Fixed assets are Tk. 6,00,000 and the firm plans to maintain a 40% debt to assets ratio. The interest rate is 10% on all debt....

The Calgary Company is attempting to establish a current assets policy. Fixed assets are
Tk. 6,00,000 and the firm plans to maintain a 40% debt to assets ratio. The interest rate
is 10% on all debt. Three alternative current asset policies are under considerations: 40,
50 and 60 percent of projected sales. The company expects to earn 10% before interest
and taxes on sales of Tk. 3 million. Calgary`s effective tax rate is 40 percent. What is
the expected return on equity under each alternative?