Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Lear, Inc., consists of $800,000 in current assets, $350,000 of which are considered permanent current assets. Additionally, the firm has $600,000 invested in fixed assets.

a) Lear wishes to finance all the fixed assets and half of its permanent current assets with long-term financing costing 10%. Short-term financing presently costs 5 percent. Lear's earnings before interest and taxes are $200,000. Find out the Lear's earnings after taxes under this financing plan. The tax rate is 30 %.

b) As an alternative, Lear might wish for to finance all fixed 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. Determine the Lear's earnings after taxes? The tax rate is 30 %.

c) Describe some of the risks and cost considerations related with each of such alternative financing strategies?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916341

Have any Question? 


Related Questions in Basic Finance

A stock is expected to grow 3 per year what is the price of

A stock is expected to grow 3% per year. What is the price of this stock if the required return is 9%? The stock is expected to pay a $1.4 dividend next year.

1 how many teams of five students each can be formed in a

1. How many teams of five students each can be formed in a class of 15 students? 2. Calculate 4C 2 and 5C 3 . 3. If you are offered $20 to draw a red ball from a bag that contains six green balls, two blue balls, and two ...

Primary task responsenbspif a company grows too fast it can

Primary Task Response:  If a company grows too fast, it can find itself without access to the resources it needs to meet its obligations. If it grows too slowly, it may find itself missing strategic as well as tactical o ...

Assignmentyour assignment is to create a 12-page

Assignment Your assignment is to create a 12-page argumentative/persuasive research paper given one of the following options: Option 1. Argue for or against an established theory related to the class. Option 2. Argue for ...

1 distinguish among descriptive correlational experimental

1. Distinguish among descriptive, correlational, experimental, and quasi-experimental research. 2. Distinguish between an independent and dependent variable.

1 money market investments what steps should you take to

1. Money Market Investments. What steps should you take to determine the best allocation of your money market investments? What factors should you consider in determining your allocation? 2. Liquidity During a Weak Econo ...

The risk free return is 01 expected return on the market

The risk free return is .01, expected return on the market portfolio is .08 and standard deviation of the return on the market portfolio is .02. What is the expected return on an efficient portfolio with a standard devia ...

Distinguish between the types of financial information

Distinguish between the types of financial information contained in the various financial statements. Which statements provide information on a company's performance over a reporting period, and which present data on a c ...

Who are the players in the government sector what is the

Who are the players in the government sector? What is the distinction between a government-owned corporation and a government-sponsored enterprise? What is the distinction between a depository financial institution and a ...

1 explain the risk premium on a bond2 explain what is meant

1. Explain the risk premium on a bond. 2. Explain what is meant by the risk-return trade-off. 3. Explain how the yield curve can assist bond investors.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen