Also assuming that the engineering firm has chosen the Conservative working capital policy (that is investment of Rs 4.5

[answerhappygod]

Also assuming that the engineering firm has chosen the
Conservative working capital policy (that is investment of Rs 4.50
crore in current assets). The company is now examining the use of
long term and short term borrowing for financing its assets. The
company will use Rs. 2.50 crore of equity funds. The corporate tax
rate is last 40%. The company is considering the following debt
alternatives: Financing Policy Short term debt Long term debt
Conservative .54 1.12 Moderate 1.00 .66 Aggressive 1.50 .16 The
average effective interest rate on short term debt is last two
digit percent while on long-term debt it is 13 percent. Determining
the following for each of the financing policies with workings (a)
Rate of return on total assets (b) Net working capital position (c)
Current Ratio (d) Rate of return on total equity