The New Scott Equipment Organization Paper Based on the following scenario, complete the calculations below: Scott Equipment Organization is investigating the use of various combinations of short-term and long-term debt in financing its assets. Assume that the organization has decided to employ $25 million in current assets, along with $40 million in fixed assets, in its operations next year. Given the level of current assets, anticipated sales and Earnings Before Interest and Taxes (EBIT) for next year are $60 million and $6 million, respectively. The organization’s income tax rate is 40%; Stockholders’ equity will be used to finance $40 million of its assets, with the remainder being financed by short-term and long-term debt. Scott’s is considering implementing one of the following financing policies: Amount of Short-Term Debt Financial Policy In mil. LTD (%) STD (%) Aggressive (large amount of short-term debt) $20 8.5 5.5 Moderate (moderate amount of short-term debt) $15 8.0 5.0 Conservative (small amount of short-term debt) $10 7.5 4.5 Determine the following for each policy: Expected rate of return on stockholders’ equity Net working capital position Current ratio Evaluate profitability versus risk trade-offs of these policies. Would you rate them low, medium, or high with respect to profitability? Would you rate them low, medium, or high with respect to risk?