What are some of the risks and cost considerations

Assignment Help Finance Basics

Reference no: EM13266942

Lear inc has 840,000 in current assets, 370,000 of which are considered permanent current assets. In addition, the firm has 640,000 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. Short term financing currently costs 7 percent. Lear's earnings before interest and taxes are 240,000.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 fixed asset sand 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 240,000. What will be Lear's earnings after taxes? The tax rate is 30 percent.

c)What are some of the risks and cost considerations associated with each of these alternative financing strategies?

Reference no: EM13266942

Questions Cloud

How would you assess its financial health : How has the financial structure of Korres changed over recent years? How would you assess its financial health?

Determine what is the integrator time constant : An opamp based integrator is measured at 1KHz to have a voltage gain of -100 V/V. At what frequency is its gain reduced to -1V/V. And, what is the integrator time constant

Determine the mass of the second block : A block of mass 200g, sliding with a speed of 12 cm/sec on a smooth level surface, makes a head-on, elastic collision with a block of unknown mass, Determine the mass of the second block

Explain the stabilization of a half-filled of shell : The stabilization of a half-filled of shell is even more pronounced than that of the p subshell. Why

What are some of the risks and cost considerations : What are some of the risks and cost considerations associated with each of these alternative financing strategies?

Design a full wave unregulated dc power supply : Design a full wave unregulated dc power supply having an input of 220 V rms 60 Hz and an output voltage maximum of 19.5 V and a minimum of 15 V. This power supply will be needed to provide power to a load which requires a maximum current

Explain efficiency and minimum possible rate of heat discard : Find the maximum possible thermal efficiency and minimum possible rate of heat discard. If the actual efficiency is 60% of the maximum and the river has a flowrate of 165 m 3 /s, what is the expected temperature rise of the river

What must be the thickness of the liquid layer : What must be the thickness of the liquid layer if normally incident light with? = 504 nm in air is to be strongly reflected

Briefly describe your dream job with an organization : Briefly describe your "dream job" with an organization for which you would like to work and create a rewards and compensation package for this position that would both attract skilled workers (you) yet control costs.

User Account

All Pages