Determine lear earnings after taxes under financing plan

Assignment Help Accounting Basics
Reference no: EM133148605

Question - Lear Inc. has $800,000 in current assets, $350,000 of which are considered permanent current assets. In addition, the firm has 15 $600,000 invested in capital assets.

a. Lear wishes to finance all capital assets and half of its permanent current assets with long-term financing costing 10 percent. Short- term financing currently costs 5 percent. Lear's earnings before interest and taxes are $200,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent.

b. As an alternative, Lear might wish to finance all capital assets and permanent current assets plus half of its temporary current assets with long-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $200,000. What will be Lear's earnings after taxes? The tax rate is 30 percent.

c. This part of the question is not part of your Connect assignment.

Reference no: EM133148605

Questions Cloud

Describe what is virtue ethics : (a) Describe what is virtue ethics and explain a clear example to illustrate the theory being applied in real life.
Providing exceptional customer service : Aspect Cellular relies upon its sales staff to boost their position in the extremely competitive cellular telephone market. With more than 500 sales representa
Type of metric measures efforts : Which type of metric measures efforts, such as the number of tweets sent or blog articles posted?
Benefits of great teamwork in an organization : Create a poster that identifies the benefits of great teamwork in an organization. Identify and discuss a successful organization that is known for their great
Determine lear earnings after taxes under financing plan : Lear's earnings before interest and taxes are $200,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent
Develop a linear program to minimize the total cost : Outdoor Inn, a camping equipment manufacturer in southern Utah, is developing a production schedule for a popular type of tent, the Double Inn.
Define the concept of attitudes : 1. Define the concept of attitudes and explain the ABC Model, and how they affect the behavior of an employee.
Increase the effectiveness of reward systems : What can organizations do to increase the effectiveness of their reward systems, whether financial or otherwise? What reward systems have you seen that were eff
Are you motivated more by intrinsic rewards : Are you motivated more by intrinsic rewards (satisfaction, sense of accomplishment, etc.) or by extrinsic rewards (money, bonuses, etc.)? Explain.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare the sales section of the income statement

The adjusted trial balance of Doqe Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2017.

  Prepare all required journal entries

Prepare all required journal entries, being certain to indicate the type of fund in which each entry would be made.

  Determine the variable cost per order shipped

The company uses the high-low method to analyze costs. Determine the variable cost per order shipped. Determine the fixed shipping costs per quarter

  Prepare the stockholders equity section of the balance sheet

Prepare the stockholders' equity section of the balance sheet at December 31, 2017

  What was the cost of goods sold using fifo flow assumption

RJ Corporation has provided the following information about one of their inventory items. What was the cost of goods sold using the FIFO flow assumption?

  Prepare the journal entries to record

Prepare the journal entries to record these transactions on the books of Bogner Company using a perpetual inventory system.

  Calculate the Net Present Value

ACCT6001 Accounting Information Systems Assessment - Excel Spreadsheet. Calculate the Net Present Value. Identify, quantify and value the costs and benefits

  Why the development process of international accounting

The IASB and the US Financial Accounting Standards Board (FASB), Why the development process of international accounting harmonization is difficult and complex.

  Depreciation for the first year of the trucks useful life

Finx, Inc., purchased a truck for $35,000. The truck is expected to be driven 15,000 miles per year over a five-year period and then sold for approximately $5,000. Determine depreciation for the first year of the truck's useful life by the straigh..

  Prepare the journal entry for wood to record the sale

Prepare the journal entry for Wood to record the sale, assuming that the recourse obligation has a fair value of $7,500

  To compensate for the uncertainty of future interest rates

To compensate for the uncertainty of future interest rates and the fact that the longer the term of a loan the higher the probability that the borrower will default, the lender typically ________.a. charges a higher interest rate on long-term loans.b..

  What is crooks current stock price

Historically, Crooks has retained 70% of its earnings with the rest paid asdividends. What is Crooks current stock price

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd