Remaining Time: 1 hour, 45 minutes, 52 seconds. * Question Completion Status: 20 points Saved McKinsee Inc. is developing a plan to finance its asset base. The firm has $5,000,000 in current assets, of which 20% are permanent, and $12,000,000 in capital assets. Long-term rates are currently 9.5%, while short-term rates are at 7%. McKinsee's tax rate is 30%. (20 marks) Required: a. Construct a conservative (low risk) financing plan with 80% of assets financed by long-term sources. If McKinsee's earnings before interest and taxes are $6,000,000, what will their net income be? (8 marks)> Submission: Upload a chart showing the following entries: Percentage of assets financed by short-term borrowing Percentage of assets financed by long-term borrowing EBIT Interest expense (short- and long-term) EBT Taxes . Net Income b. An alternative and more aggressive (higher risk) plan would be to finance 60% of total assets with long-term financing. Assuming that EBIT was again $6,000,000, what will net income be under this alternative? (8 marks) Submission: Upload a chart showing the same entries as listed in a)

O ENG 11 2023