Current Asset Financing $(15$ marks$)$

Golton Systems Inc. is trying to develop an asset$-$financing plan. The firm has $$150,000$ in temporary current assets and $$175,000$ in permanent current assets. Golton also has $$350,000$ in capital assets. Assume a tax rate of $35$ percent.

a$)$ Construct two alternative financing plans for Golton's assets. One of the plans should be conservative, with the capital assets, permanent current assets and $25$ percent of temporary current assets financed by long$-$term sources. The other plan should be aggressive, with temporary current assets and $30$ percent of permanent current assets financed by short$-$term sources. The current interest rate is $13$ percent on long$-$term funds and $8$ percent on short$-$term financing. $-10$ marks

b$)$ Given that Golton's earnings before interest and taxes are $$185,000,$ calculate earnings after taxes for each of your alternatives. $-5$ marksCurrent Asset Financing $(15$ marks$)$

Golton Systems Inc. is trying to develop an asset$-$financing plan. The firm has $$150,000$ in temporary current assets and $$175,000$ in permanent current assets. Golton also has $$350,000$ in capital assets. Assume a tax rate of $35$ percent.

a$)$ Construct two alternative financing plans for Golton's assets. One of the plans should be conservative, with the capital assets, permanent current assets and $25$ percent of temporary current assets financed by long$-$term sources. The other plan should be aggressive, with temporary current assets and $30$ percent of permanent current assets financed by short$-$term sources. The current interest rate is $13$ percent on long$-$term funds and $8$ percent on short$-$term financing. $-10$ marks

b$)$ Given that Golton's earnings before interest and taxes are $$185,000,$ calculate earnings after taxes for each of your alternatives. $-5$ marks