Question
Hi, can you please answer the following question in finance management Colter Steel has $4,200,000 in assets. The temporary current assets are in place for
Hi, can you please answer the following question in finance management
Colter Steel has $4,200,000 in assets. The temporary current assets are in place for nine months and reduce to zero for three months.
Temporary current assets | $1,000,000 |
Permanent current assets | $2,000,000 |
Capital assets | $1,200,000 |
Total assets | $4,200,000 |
Shot-term rates are 8 percent. Long-term rates are 13 percent. ( Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $996,000. The tax rate is 30 percent.
If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after tax be?
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