Gerentology Associates, a highly profitable company, is considering 2 growth stategies, one that will achieve sales growth of 20% in one year, and the other that will achieve 20% growth in sales but over a 4 year time frame. Assuming they use the percentage of sales method, which of the following statements is true?
A-Discretionary financing needed will be much greater for the 4 year growth strategy.
B-Discretionary financing needed could be much less for the 4 year growth strategy due to retained earnings.
C-Discretionary financing needed could be much greater for the slow growth strategy because interest charges will accumulate on the company’s debt.
D-The asset balances at the end of 4 years for strategy 2 will be much greater than the asset balances required at the end of year one for strategy one.