Business, 11.10.2020 23:01 riiahh22

Lear Inc. has $940,000 in current assets, $420,000 of which are considered permanent current assets. In addition, the firm has $740,000 invested in fixed assets. A. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 9%. The balance will be financed with short-term financing, which currently costs 5%. Lear’s earnings before interest and taxes are $340,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30%.
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 $340,000. What will be Lear's earnings after taxes? The tax rate is 30%.

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Lear Inc. has $940,000 in current assets, $420,000 of which are considered permanent current assets....

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