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Lear Inc. has $860,000 in current assets, $380,000 of which are considered permanent current assets....

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Accounting

Lear Inc. has $860,000 in current assets, $380,000 of which are considered permanent current assets. In addition, the firm has $660,000 invested in fixed assets.

a.Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 10 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear's earnings before interest and taxes are $260,000. Determine Lear's earnings

Earnings after taxes _____

b.As an alternative, Lear might wish to finance allfixed 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 parta. Earnings before interest and taxes will be $260,000. What will be Lear's earnings after taxes? The tax rate is 30 percent.

Earnings after taxes _____

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