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Guardian Inc. is trying to develop an asset-financing plan. The firm has $400,000 in temporary current assets and $300,000 in permanent current assets. Guardian also has $500.000 in fixed assets. Assume a tax rate of 40 percent a. Construct two alternative financing plans for by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed current interest rate is 15 percent on long-term funds and 10 percent on short-term financing. Comput under each plan. Guardian. One of the plans should be conservative, with 75 percent of assets financed by long-term sources. The e the annual interest payments Annual Interest b. Given that Guardians earnings before interest and taxes are $200,000, calculate earnings after taxes for each of your alternatives. Earning After Aggressive c. What would the annual interest and earnings after taxes for the conservative and aggressive strategies be if the short-term and long- term interest rates were reversed?
points b. Given that Guardians earnings before interest and taxes are $200,000, calculate earnings after taxes for each of your alternatives References c. What would the annual interest and earnings after taxes for the conservative and aggressive strategies be if the short-term and long term interest rates were reversed?
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Home nert Page Layout Formulas Data Review View dd-Ins Cut aCopy Σ AutoSum ー E ゴWrap Text в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 C Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear Sort &Find & Format Painter Clipboard Alignment Number Cells Edting AB 110 400000 temporary current assets permanent current assets fixed assets total assets 112 113 114 115 116 1200000 conservative plan long term sources short term sources 75% 25% 900000 1200000 X 75% 300000 1200000 X 25% annual interest 15% 1096 135000900000 x 15% 30000 300000 x 1096 total interest 118 119 120 121 122 123 124 125 126 127 128 4 Sheet1 Sheet2 Z SCORE nsu pv f cash 165000 aggressive plan long term sources short term sources 56.25% 43.75% 6750001200000 x 56.25% 5250001200000 x 43.75% annual interest 15% 1096 101250675000 x 15% 52500 525000 x 10% 153750 total interest ANNUAL INTEREST conservative plan 165000 aggressive plan 153750 LINE OF CREDIT miler Sheet3 BANKER ACCEPTANC0 09-01-2019

Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text ta copy. B า 프 . Ej-., Δ. : r_一 逻锂函Merge & Center. $, % , 弼,8 conditional Format . Cell Insert Delete Format Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard Alignment Number Cells P141 AB 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 4 Sheet1 Sheet2 Z SCORE nsu pv fv cash ANNUAL INTEREST conservative plan aggressive plan 165000 153750 CONSERVATIVE EBIT INTEREST EBT TAX EAT 200000 165000 35000 14000 21000 AGGRESSIVE 200000 153750 46250 18500 27750 EARNINGS AFTER TAX conservative plan aggressive plan 21000 27750 LINE OF CREDIT miler Sheet3 BANKER ACCEPTANC0 09-01-2019

Home nert Page Layout Formulas Data Review View dd-Ins as Cut E AutoSum ー E ゴWrap Text в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 C Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear Sort &Find & Format Painter Clipboard Alignment Number Cells Edting Formula Bar AB conservative plan long term sources short term sources annual interest 1096 15% 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 4 Sheet1 Sheet2 z sCORE nsu pv fcash 75% 25% 900000 1200000 X 75% 300000 1200000 X 25% 90000 900000 x 1096 45000 300000 X 15% total interest 135000 aggressive plan long term sources short term sources 56.25% 43.75% 6750001200000 x 56.25% 5250001200000 x 43.75% annual interest 1096 15% 67500 675000 x 1096 78750 525000 x 15% total interest 146250 CONSERVATIVE EBIT INTEREST EBT TAX EAT 240000 135000 105000 42000 63000 AGGRESSIVE 240000 146250 93750 37500 56250 CONSERVATIVE AGGRESSIVE 146250 56250 TOTAL INTEREST 135000 63000 EARNINGS AFTER TAX LINE OF CREDIT miler Sheet3 BANKER ACCEPTANC0 09-01-2019

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