Question: Please answer both a and b part Lear Inc has $800,000 in current assets, $350,000 of which are considered permanent In addition, the firm has
Lear Inc has $800,000 in current assets, $350,000 of which are considered permanent In addition, the firm has $600,000 invested in capital assets Short term financing currently costs 5%, while long term financing costs 10% Lear's shareholders equity is $300,000 Lear's EBIT is 200,000. The tax rate is 30% 800,000 0.000 Current Assets of which permanent Capital assets Shareholders' equity 3 EBIT Tax rate ST interest LT interest 2,00,000 3071 590 LOX 6,00,000 300.000 6 Lear wishes to finance all capital assets and all its permanent current assets with equity and long term debt. The remaindor will be financed with short term detit Determine Lear's EAT under this financing plan. B 9 1 As an alernative, Lear might wish to finance all capital assets with equity and long-term debit, while the remainder will be financed with short term debit Determine Lear's EAT under this financing plan
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