Lear Incorporated has $$810,000$ in current assets, $$355,000$ of which are considered permanent current assets. In addition, the firm has $$610,000$ invested in fixed assets.

Lear wishes to finance all fixed assets and half of its permanent current assets with long$-$term financing costing $8$ percent. The balance will be financed with short$-$term financing, which currently costs $4$ percent. Lear$$s earnings before interest and taxes are $$210,000.$ Determine Lear$$s earnings after taxes under this financing plan. The tax rate is $40$ percent.

As an alternative, Lear might wish to finance all 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 $$210,000.$ What will be Lear$$s earnings after taxes? The tax rate is $40$ percent.