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Lear, Inc., has $830,000 in current assets, $365,000 of which are considered permanent current assets. In addition, the firm has $630,000 invested in fixed assets.

Lear, Inc., has $830,000 in current assets, $365,000 of which are considered permanent current assets. In addition, the firm has $630,000 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 6 percent. Lears earnings before interest and taxes are $230,000. Determine Lears earnings after taxes under this financing plan. The tax rate is 40 percent. (Omit the "$" sign in your response.) Earnings after taxes $ (b) As an alternative, Lear might wish to finance all of its fixed 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 part a. Earnings before interest and taxes will be $230,000. What will be Lears earnings after taxes? The tax rate is 40 percent. (Omit the "$" sign in your response.) Earnings after taxes $

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