Give Answer Of Accounting Question Lear Inc. has $1,020,000 in current assets, $460,000 of which are consideredpermanent current assets. In addition, the firm has $820,000 invested in fixedassets.a. Lear wishes to finance all fixed assets and half of its permanent current assetswith long-term financing costing 8 percent. The balance will be financed withshort-term financing, which currently costs 5 percent. Lear's earnings beforeinterest and taxes are $420,000. Determine Lear's earnings after taxes underthis financing plan. The tax rate is 30 percent.b. As an alternative, Lear might wish to finance all fixed assets and permanentcurrent assets plus half of its temporary current assets with long-termfinancing and the balance with short-term financing. The same interest ratesapply as in part a. Earnings before interest and taxes will be $420,000. Whatwill be Lear's earnings after taxes? The tax rate is 30 percent.

Step 1: Define Short-term loanA short-term loan is the type of loan taken by an enterprise to…

Answered: Lear Inc. has $1,020,000 in current…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 5P

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Lear Incorporated has $900,000 in current assets, $400,000 of which are considered permanent current assets. In addition, the firm has $700,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear's earnings before interest and taxes are $300,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes
Lear Incorporated has $1,020,000 in current assets, $ 460,000 of which are considered permanent current assets. In addition, the firm has $820, 000 invested in fixed assets. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear's earnings before interest and taxes are $420,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $420,000. What will be Lear's earnings after taxes? The tax rate is 30 percent.
Lear Incorporated has $810,000 in current assets, $355,000 of which are considered permanent current assets. In addition, the firm has $610,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 4 percent. Lear's earnings before interest and taxes are $210,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 40 percent. Earnings after taxes b. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $210,000. What will be Lear's earnings after taxes? The tax rate is 40 percent. Earnings after taxes
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Lear, Inc. has $1,000,000 in current assets, $430,000 of which are considered permanent current assets. In addition, the firm has $680,000 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 $280,000. 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 $280,000. What will be Lear's earnings after taxes? The tax rate is 30 percent. Earnings after taxes c. Not available in Connect. $ $113400
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Muffin's Masonry, Inc.'s, balance sheet lists net fixed assets as $24 million. The fixed assets could currently be sold for $39 million. Muffin's current balance sheet shows current liabilities of $10.5 million and net working capital of $9.5 million. If all the current accounts were liquidated today, the company would receive $7.75 million cash after paying the $10.5 million in current liabilities. What is the book value of Muffin's Masonry's assets today and the market value of these assets? (Enter your answer in millions of dollars rounded to 2 decimal places.) Current assets Fixed assets Total BOOK VALUE MARKET VALUE (in millions of dollars)
The Karson transport company currently has net operating income of $495,000 and pays interest expenses of $198,000. The company plans to borrow $1.02 million on which the firm will pay 12 percent interest. The borrowed money will be used to finance an investment that is expected to increase the firm’s net operating income by $397,000 a year. A. What is Karson’s time interest earned ratio before the loan is taken out and the investment is made ? The times interest ratio is Round to two decimal places.

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