Question: Lear Inc. has $ 8 0 0 , 0 0 0 in current assets, $ 3 5 0 , 0 0 0 of which are

Lear Inc. has $800,000 in current assets, $350,000 of which are considered permanent current assets. In addition, the firm has $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. Shortterm 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.
Earnings after taxes
$
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.
Earnings after taxes
$
c. This part of the question is not part of your Connect assignment.
Lear Inc. has $800,000 in current assets, $350,000 of which are

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