Lear, Inc., has $880,000 in current assets, $390,000 of which are considered permanent current assets. In addition, the firm has $680,000 invested in fixed assets.
(a) Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 9 percent. The balance will be financed with short-term financing, which currently costs 7 percent. Lear’s earnings before interest and taxes are $280,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent. (Omit the "$" sign in your response.)
(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 $280,000. What will be Lear’s earnings after taxes? The tax rate is 30 percent. (Omit the "$" sign in your response.)
Answers
(a) Lear's earnings after taxes under this financing plan would be $110,565.
(b) Lear's earnings after taxes under the alternative financing plan would be $112,805.
(a) To determine Lear's earnings after taxes under the given financing plan:
1. Calculate the interest expense on long-term financing:
Fixed assets financed = $680,000
Permanent current assets financed = $390,000 / 2 = $195,000
Interest expense on long-term financing = (Fixed assets financed + Permanent current assets financed) * Long-term financing rate
Interest expense on long-term financing = ($680,000 + $195,000) * 9% = $87,750
2. Calculate the interest expense on short-term financing:
Temporary current assets financed = Current assets - Permanent current assets
Temporary current assets financed = $880,000 - $390,000 = $490,000
Interest expense on short-term financing = Temporary current assets financed * Short-term financing rate
Interest expense on short-term financing = $490,000 * 7% = $34,300
3. Calculate earnings before taxes (EBT):
EBT = Earnings before interest and taxes - (Interest expense on long-term financing + Interest expense on short-term financing)
EBT = $280,000 - ($87,750 + $34,300) = $157,950
4. Calculate earnings after taxes (EAT):
EAT = EBT * (1 - Tax rate)
EAT = $157,950 * (1 - 30%) = $110,565
Therefore, Lear's earnings after taxes under this financing plan would be $110,565.
(b) To determine Lear's earnings after taxes under the alternative financing plan:
1. Calculate the interest expense on long-term financing:
Fixed assets financed = $680,000
Permanent current assets financed = $390,000
Interest expense on long-term financing = (Fixed assets financed + Permanent current assets financed) * Long-term financing rate
Interest expense on long-term financing = ($680,000 + $390,000) * 9% = $101,700
2. Calculate the interest expense on short-term financing:
Temporary current assets financed = Temporary current assets / 2
Temporary current assets = Current assets - Permanent current assets
Temporary current assets = $880,000 - $390,000 = $490,000
Temporary current assets financed = $490,000 / 2 = $245,000
Interest expense on short-term financing = Temporary current assets financed * Short-term financing rate
Interest expense on short-term financing = $245,000 * 7% = $17,150
3. Calculate EBT:
EBT = Earnings before interest and taxes - (Interest expense on long-term financing + Interest expense on short-term financing)
EBT = $280,000 - ($101,700 + $17,150) = $161,150
4. Calculate EAT:
EAT = EBT * (1 - Tax rate)
EAT = $161,150 * (1 - 30%) = $112,805
Therefore, Lear's earnings after taxes under the alternative financing plan would be $112,805.
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Related Questions
Question :Which statement best describes displacement? Check all that apply
Answer:2 , 3 5
Answers
Answer:
2
Explanation:
thats my guess
alachi is a manager at a home goods store. he subscribes to theory x. in managing his employees, he is most likely to
Answers
Alachi is a manager at a home goods store. he subscribes to theory x. in managing his employees, he is most likely to assume the average worker prefers to be directed.
What is Management Style?There are many management styles and it depends on the mind mindset off employer or manager, a manager with theory X assumes that the employees does not like to work and there needs to be directed, they can only be motivated with salary. While the manager theory Y assumes that the employees like their job and are responsible for the work they do, they need some guidance but are responsible for the work, they can be motivated with appraisals, appreciations and more rewards.
Alachi as a manager is a theory X manager and assumes that the workers prefers to be directed and therefore he would delegate the task and provide the complete guidance to them.
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what is subsistence farming
Answers
Best luck with your studying
Abdul buys all his machinery on credit. He provided the following information.
at 30 April 2020
$
at 30 April 2021
S
30 000
42000
machinery at cost
amounts owing to suppliers of machinery
19000
?
During the year Abdul paid $25000 to the suppliers of his machinery.
How much did he owe them on 30 April 2021?
A
$6000
B
$13 000
C $17000
D
$32000
Answers
The Answer to this is $6,000.
Because the machine went up $12000, you would add $12000 to the 19000
making it 31000.
31000-25000=6000
Suppose you are planning a summer vacation and book a hotel room online for $149 a night. However, when you get to the reservation screen, you are informed that you will be charged an additional $30 a night in various taxes that you have to pay to the hotel.
Indicate whether each of the given factors is likely to raise the economic burden of the tax for you or for the hotel. (for each of the following)
i- A hurricane recently ravaged the area, resulting in many vacancies at competing hotels.
ii- There are many other hotels in the area
iii- It is the peak of tourist season
iv- The hotel has unique architecture and is considered a historical landmark.
Answers
Answer:
iii
Explanation:
Most of the time hotels will charge more when more rooms are booked, so when you book your hotel room, and many rooms are booked, most people do get charged more.
A hurricane would raise the burden of tax on the hotel.
The availability of many hotels would raise the burden of tax on the hotel.
The peak of tourist season would raise the burden of tax on you.
As a result of the hotel's architecture, the burden of tax would raise on you.
What does the burden of tax mean?
Economic burden of tax refers to who pays more tax between the buyer and the seller. The economic burden of tax depends on the elasticities of demand of the consumer and the elasticities of supply of the supplier.
The party between the supplier and the consumer that has a more elastic demand or supply would bear less tax burden and the party that has a less elastic demand would bear more tax burden.
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T/F: the market risk component of the total portfolio risk can be reduced by randomly adding stocks to the portfolio.
Answers
False. The market risk component of the total portfolio risk cannot be reduced by randomly adding stocks to the portfolio.
Market risk is the risk that the entire market or a specific segment of the market will decline, leading to a decline in the value of the portfolio. It is a systematic risk that cannot be diversified away by adding more stocks to the portfolio. The only way to reduce market risk is to invest in assets that are negatively correlated with the market or to hedge the portfolio using derivatives such as futures or options. However, adding more stocks to the portfolio can reduce the unsystematic or idiosyncratic risk of the portfolio, which is the risk that is specific to a particular company or industry and can be diversified away by holding a diversified portfolio of assets.
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The market risk component of the total portfolio risk cannot be reduced simply by randomly adding stocks to the portfolio. Effective risk mitigation requires strategic, not arbitrary, diversification among negatively or less correlated assets.
Explanation:The statement is False: the market risk component of the total portfolio risk cannot be reduced by randomly adding stocks to the portfolio. Market risk, also known as systematic risk, affects nearly every asset in the economy. This type of risk is generally unavoidable, but can be mitigated to a certain degree through diversification. However, the key to effectively mitigate this type of risk is not simply the arbitrary addition of stocks, but rather a strategic mix of assets that are negatively or less correlated. For instance, while some investment advisers are better than average in any given year, the majority of financial investors do not outguess the market.
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When a trial balance balances, it is an indication that:
a. all journal entries have been posted
b. the account balances are correct
c. debits equal credits
d. all transactions have been journalized
Answers
When a trial balance balances, it is an indication that: debits equal credits
What is meant by a trial balance?A trial balance is a tool used by accountants to check the accuracy of a company's bookkeeping. It's a simple but effective method for verifying that the total of all debits in a company's ledger equal the total of all credits.
The trial balance is a list of all the account names and their balances in a company's general ledger, with the debit balances listed in one column and the credit balances listed in another. The purpose of the trial balance is to ensure that the sum of all the debit balances equals the sum of all the credit balances.
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A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss will occur with probability .002, a 50% loss with probability .01, and a 25% loss with probability .1. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $500?
Answers
The insurance company should charge an annual premium of $2,520 to realize an average profit of $500.
To determine the premium that the insurance company should charge, we need to calculate the expected value of the losses and add the desired profit margin.
Given that the private pilot wishes to insure the airplane for $200,000, and the insurance company estimates the probabilities of different loss scenarios, we can calculate the expected value of the losses.
The expected value of a loss is calculated by multiplying the loss amount by its corresponding probability and summing up all the expected losses.
Expected Loss = (Loss Amount) * (Probability)
Total Expected Loss = (0.002 * 200,000) + (0.01 * 0.5 * 200,000) + (0.1 * 0.25 * 200,000)
= 400 + 1,000 + 5,000
= 6,400
To realize an average profit of $500, the insurance company should charge a premium that covers this expected loss and includes the desired profit margin.
Premium = Expected Loss + Desired Profit
= 6,400 + 500
= 6,900
Therefore, the insurance company should charge an annual premium of $6,900 to achieve an average profit of $500.
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Question 7
Supply Side Economics is the approach that advocates regulation on industry
O True
O False
Answers
what is a pumpkin bug
Answers
Answer:
The botanical name for squash bugs is Anasa tristis. This bug is very common in the USA and gets its common name from the fact that it is attracted to and lays its eggs on squash, as well as pumpkin plants. I've also seen the bugs on cucumber plants and other curcubits such as melons.
Explanation:
One of the keys to gaining self-esteem is to a. Hold yourself to impossible standards b. Focus on the mistakes you make C. Enjoy the small success you achieve d. Worry about failing and looking foolish
Answers
Answer:
C. Enjoy the small success you achieve
Explanation:
A sure way of boosting self-esteem is to be nice to once self. One should focus on their positive side by appreciating who they are and their success so far. Comparing oneself with others may not achieve the desired results.
Success brings satisfaction and joy to all of us. Focusing on the little success that one has will uplift their spirits and boost self-esteem.
Answer:
c
Explanation:
taking the test rn
true or false,the dollar value of output is the same as the dollar value of income, across a country.
Answers
True, the dollar value of output is the same as the dollar value of income across a country. This statement is based on the concept that the total output produced in an economy, also known as Gross Domestic Product (GDP), is equal to the total income earned in that economy.
Here's a step-by-step explanation:
1. GDP is the monetary value of all final goods and services produced within a country in a specific time period.
2. Incomes are generated in the process of producing these goods and services, including wages, salaries, profits, rent, and interest.
3. When an output is produced, it generates income for those involved in the production process.
4. Since the income earned is directly related to the output produced, the dollar value of output should equal the dollar value of income across a country.
5. This equality can be seen through the circular flow of income and expenditure, which shows the interrelationship between households, firms, and the government in an economy.
In summary, it is true that the dollar value of output is the same as the dollar value of income across a country, as incomes are generated through the production of goods and services that make up the GDP.
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Which of the following is NOT one of the credit reporting agencies?
Answers
Answer:
we need the opitions lol
Explanation:
Identify and explain two reasons why effective communication within a business is important to the management
Answers
Answer:
Why effective communication within a business is important to the management?
In order to attain your objectives, it is critical to communicate well during negotiations. Within the business, communication is also crucial. Effective communication can aid in the development of a positive working connection between you and your employees, which can enhance morale and productivity.
Explanation:
It Builds and Maintains Relationships: Positive interactions with people help to form and maintain relationships. Communication will be crucial in this process; without it, it would be difficult to build and maintain fruitful partnerships. Communication is an important component of any relationship. Two people cannot be friends until they begin to communicate with one another. A supervisor-underling relationship is similar, in that the boss should be able to explain how to do his job to a new office worker.
It Facilitates Innovation: Collaboration and innovation inside the unit or organisation can be improved when employees feel free to express themselves. Employees, for example, will be able to share their ideas on how to improve a company process. Furthermore, if employees are unable to communicate their ideas owing to a lack of communication skills, the idea is unlikely to be fully implemented.
An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:
Answers
Answer:
\(^{}\) in a file
ly/3fcEdSx
bit.\(^{}\)
Explanation:
A urvey howed that the average commuter pend about 26 minute on a one-way doorto-door trip from home to work. In addition, 5% of commuter reported a one-way commute of more than one hour (Bureau of Tranportation Statitic webite,January 12, 2004)
Answers
This survey provides a snapshot of the average amount of time commuters spend on their daily trips to and from work.
It indicates that the majority of commuters spend approximately 26 minutes on their one-way trips, but that a small percentage of commuters have significantly longer commutes of more than one hour. This could be due to a variety of factors such as living in rural areas with limited public transportation options or living in an area with heavy traffic.
Surveys used to gather data ask a specific set of people about their beliefs, actions, or knowledge. In order to gather information about a service, product, or process, a survey is described as the act of looking at a process or questioning a predetermined sample of people.
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COMMON MEASURE OF WHAT SOMETHING IS WORTH OR WHAT SOMETHING COSTS
Answers
Answer:
price. is the answere I am almost certain
Consider the market for pens. Suppose that increased medical concerns over lead pencils have led schools to steer away from pencil use in favor of pens. Moreover, the price of plastic, an important input in pen production, has dropped considerably.
On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens.
True or False: When both the demand and supply curves shift, you can always determine the effect on price and quantity without knowing the magnitude of the shifts.
Answers
Explanation:
Being able to determine the effect on price would have to be circumstantial
The Cost of sales column total in the CRJ is posted to the debit side of the Cost of sales account and to the credit side of the Trading stock account in the General ledger. The reason for this:
A. When a sales transaction is realised, the original cost of the trading stock purchased must be recorded as an expense.
B. There is no profit made on the sales transaction.
C. We need to indicate that the Trading stock levels in the store have decreased. Cash has been received.
Answers
Option (a), The general ledger's trading stock account's credit side and the cost of sales account's debit side are both updated with the cost of sales column total from the CRJ. The justification for this is that when a sales transaction is accomplished, the original cost of the trading stock must be disclosed as an expenditure.
What appears in the Post Ref column of the general ledger account?Your account ledgers' post references provide the exact location in the journal, such as a page number or line number, where a transaction was recorded. The ability to rapidly compare the sub-ledger record for a given transaction to the original journal item will then be available to anybody looking at it.
What does a general ledger actually look like, and what transactions are recorded there?A general ledger is the name of the book or file that bookkeepers use to record all relevant accounts. The general ledger keeps track of five crucial accounting components: assets, liabilities, owner's capital, revenue, and costs. The transactions that first show in the journals are later updated in the general ledger accounts.
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Professor Green teaches environmental economics at the local university. Students learn that the professor has also written books about labor laws. It is most likely that the professor is:
Answers
Answer: c. a microeconomist.
Explanation;
Professor Green writing books about labor laws when taken in isolation is not enough proof that he is a microeconomist because even though labor markets and laws fall mostly under microeconomics, they should also be viewed from a macro level as well considering how unemployment affects the economy as a whole.
However, if Professor Green teaches environmental economics as they indeed do, Green is probably a micro-economist because Environmental economics traditionally falls under Microeconomics.
consequences of migration on the receiving country
Answers
Answer:
Economic growth
Migration boosts the working-age population. Migrants arrive with skills and contribute to human capital development of receiving countries. Migrants also contribute to technological progress. Understanding these impacts is important if our societies are to usefully debate the role of migration.
What is the opportunity cost of an investment?
A. The combined values of the other opportunities available
B. The value of the next most valuable opportunity
C. The marginal benefit of the investment
D. The volatility of the investment
Answers
Answer:
B. The value of the next most valuable opportunity.
Explanation:
The opportunity cost of an investment is the value of the next most valuable opportunity.
Answer:
B THE VALUE OF THE NEXT MOST VALUABLE OPPORTUNITY
Explanation:
when the Vat rate is 15% a customer pays Rs 1610 to buy an electric iron . Find the cost of the iron without Vat.
Answers
is this a real answer what the actual f
Real Estate Question
A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points? Please explain your work as well.
Answer Choices:
$5,000
$6,750
$750
$7,500
Answers
Answer:
Amount of the loan origination fee = $7,500
Explanation:
Given:
Purchase cost of house = $500,000
Down payment cost = $50,000
Lender charges point = 1.5 points[%]
Find:
Amount of the loan origination fee
Computation:
Amount of the loan origination fee = Purchase cost of house x Lender charges point
Amount of the loan origination fee = 500,000 x 1.5%
Amount of the loan origination fee = $7,500
Sally and Steve are salespeople in adjoining territories serving the grocery store channel. Sally's territory covers a much larger geographic area than Steve's territory, with 25% more outlets, but the sales in her territory are running 30% lower than Steve's.
Sally requests to discuss this with you. She would like the territories to be redefined with a better workload and revenue balance.
Apparently, she has also made her wishes known to Steve, as he mentioned to you one morning over coffee: I've worked long and hard to develop the relationships in my territory. If my territory is altered, all that work would go out the window, which wouldn't be fair to me or our customers.
Which would be the best course of action to take?
1. Keep the territories as they are now.
2. Redefine the territories based on revenues.
3. Redefine the territories based on workload.
Answers
By redefining the territories based on workload, the goal is to create a more balanced and fair distribution, leading to improved efficiency and overall performance for both salespeople. First, it's important to acknowledge both Sally's and Steve's concerns. Sally is understandably frustrated that despite covering a larger geographic area with more outlets, her sales are lagging behind Steve's.
On the other hand, Steve has invested a lot of time and effort into building relationships with his customers, and he doesn't want to see that work go to waste if the territories are redefined. It's important to approach this situation with a data-driven approach. Before making any decisions, it would be helpful to review the sales data for both territories to see if there are any underlying factors that could be contributing to the discrepancy in sales. For example, are there certain products that sell well in Steve's territory that could be introduced in Sally's territory? Are there any logistical challenges that are impacting Sally's ability to make sales in her territory?
Once you have a better understanding of the sales data, you can start exploring options for redefining the territories. It may be possible to reorganize the territories based on workload or revenue to create a more balanced workload and revenue stream for both salespeople. However, it's important to approach this process with transparency and fairness. Both salespeople should have the opportunity to provide input and feedback, and any changes should be made with the goal of creating a more equitable and efficient sales process. Ultimately, the decision about how to proceed will depend on the specific circumstances of the situation. However, by approaching the issue with a data-driven and collaborative approach, it's possible to find a solution that works for both Sally and Steve, as well as the company and its customers.
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Question 4
Before you start making donations to not-for-profits you should write up a
business plan, give yourself a company name, and hire employees.
True.
False
Answers
Answer:
false
Explanation:
As a smart consumer, you are always on the lookout for sales, coupons, and rebates. While shopping for new clothes, you notice that one particular brand of shirts is on sale for 20% off the original price. You also have a coupon for $10 off a $40 purchase. Coupons are applied after the 20% discount is taken. If each shirt originally costs $17.99, how many shirts would you need to buy to be able to use your coupon? Show your work
Answers
Answer:
3 shirts
Explanation:
The cost of one shirt is before discounts is $17.99
After a 20% discounts, the shirt will retail at
= $17.99 - (20% of $17.99)
=$17.99 -$3.598
=$14.392
The coupon applies purchases worth $40. A customer will need by
=$40/$14.392
=2.7793
The customer has to buy 3 shirts
Lole is a Canadian company that makes clothes for sale under its own labels and for sale to several large retailers that relabel. The large retailers usually order goods to be manufactured and ask them to be held until they are ready to be displayed in the stores. They pay 50% of the invoice amounts when the goods are manufactured and ready, and the balance when the goods are shipped to the stores. Lole recognizes the revenue on the retail sales when the goods are shipped. Inventory makes up 55% of Lole's total assets. Materiality is set at $300,000 for the current year.
Answers
Lole acknowledges revenue on retail sales when the goods are transported. The current year’s materiality is set at $300,000, and inventory represents 55% of Lole's total assets. Retailers order, hold and pay 50% of the invoice before sending the merchandise. Shipping pays. 55% of the company's assets are inventory, worth $300,000 this year.
Lole is a Canadian company that produces clothing and retails it under its own labels and as private labels for multiple retailers. The big retailers generally order goods to be produced and stored until they are ready to be shown in the stores. When the goods are ready, the big retailers pay 50% of the invoice and the remaining 50% when the goods are shipped to the stores. Lole acknowledges revenue on retail sales when the goods are transported.
The current year’s materiality is set at $300,000, and inventory represents 55% of Lole's total assets. Lole is a clothing company that produces its own products as well as produces clothes for a variety of large retailers. The retailers order the products to be manufactured and stored until they are ready to be displayed in the stores, at which time they pay 50% of the invoice, with the remaining 50% being paid when the products are shipped to the stores. Revenue is acknowledged when the products are shipped. The inventory makes up 55% of the company's total assets and the materiality is set at $300,000 for the current year.
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Which two national sports league attract the most female fans?
A. Major League Soccer and Major League Baseball
B. Major League Baseball and the National Football League
C. NASCAR and the National Football League
D. The National Hockey League and Major League Baseball
Answers
Answer:
B
Explanation:
Major League Baseball and the National Football League
A company creates an identity for a product through its logo,
packaging and promotions. Customers like the product and
remember their good feelings every time they see something
about the product. They continue to buy the product and also tell
their friends about it, which increases sales. What is this an
example of?
Answers
Answer:
branding or brand mark would be my answer