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Hicks Health Club, Inc., experts to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. The company's tax bracket
Hicks Health Club, Inc., experts to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. The company's tax bracket is 40%. if the firm uses short-term debit, its rate will be 7.5%, and if it uses long-term debt, its rate will be 9%. By how much will earnings after taxes change if the company chooses the more conservative financing plan instead of the more aggressive plan? A) $10,000 B) ($10,800) C) ($18,000) D) $6,000
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