Lear Inc. has $$800,000$ in current assets, $$350,000$ of which are considered permanent current assets. In addition, the firm has $$600,000$ invested in capital assets.

a$.$ Lear wishes to finance all capital assets and half of its permanent current assets with long$-$term financing costing $10$ percent. Shortterm financing currently costs $5$ percent. Lear's earnings before interest and taxes are $$200,000.$ Determine Lear's earnings after taxes under this financing plan. The tax rate is $30$ percent.

Earnings after taxes

$

b$.$ As an alternative, Lear might wish to finance all capital 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.$ What will be Lear's earnings after taxes? The tax rate is $30$ percent.

Earnings after taxes

$

c$.$ This part of the question is not part of your Connect assignment.