Homework answers / question archive / Lear, Inc

Lear, Inc

Finance

Share With

Lear, Inc. has $1700,000 in current assets, $470,000 of which are considered permanent current assets_ In addition, the firm has $720,000 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 $320,000 Determine Lear's earnings after taxes under this financing plan_ The tax rate is 30 percent 
Earnings after taxes 
I 1 
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 $320,000 What will be Lear's earnings after taxes? The tax rate is 30 percent 
Earnings after taxes $ 
c. Not available in Connect,