Earnings after taxes under this financing plan

Assignment Help Financial Management

Reference no: EM131352554

a. Lear Inc. has $900,000 in current assets, $400,000 of which are considered permanent current assets. In addition, the firm has $700,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear’s earnings before interest and taxes are $300,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent.

earnings after taxes_______________

b. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $300,000. What will be Lear’s earnings after taxes? The tax rate is 30 percent.

earnings after taxes________________

Reference no: EM131352554

Questions Cloud

What is the terminal cash flow for year three : You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equipment for special use by the firm. What is the operating cash flow for year 3? What is t..

What were different type of financial institutions discussed : FIN 370- What were the different types of financial institutions discussed in the various videos on Lynda.com. How many different types of these institutions have you had your money in or worked with?

Calculate and the adiabatic flame temperature tad : Repeat (b), but use air instead of O2 as the oxidizer. What can you say about the differences in the answers here as compared with those in (b)?

Discuss about the nursing leadership and management : NRS-451V:Describe how alignment between the values of an organization and the values of the nurse impact nurse engagement and patient outcomes.Discuss how an individual can use effective communication techniques to overcome workplace challenges, e..

Earnings after taxes under this financing plan : Lear Inc. has $900,000 in current assets, $400,000 of which are considered permanent current assets. In addition, the firm has $700,000 invested in fixed assets. The balance will be financed with short-term financing, which currently costs 5 percent...

Determining the threads main view : Choose one learning strategy from one of the videos and discuss how the you could extend the cognitive and language learning of children. Discuss specifically the learning environment, learning materials and learning strategies in your response to..

What might be the key processes for health-care organization : What might be the key processes for health-care organizations? What are the potential common causes of variation that would have an impact on the key processes of health-care organizations?

Check and correct translation in term of acceptability : Check and correct my translation in term of acceptability, readability, translation accuracy, grammar, language style and used.

Importance of the change in co with exercise : Discuss the importance of the change in CO with exercise?

User Account

All Pages