Question: can you please help me out with this question lotal points awarded Help Lear, Inc. has $1,250,000 in current assets, $530,000 of which are considered
can you please help me out with this question

lotal points awarded Help Lear, Inc. has $1,250,000 in current assets, $530,000 of which are considered permanent current assets. In addition, the firm has $780,000 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 $380,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes $ 158,375 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 $380,000. What will be Lear's earnings after taxes? The tax rate is 30 percent. Earnings after taxes $ 178,500 c. Not available in Connect
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
