Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. guardian inc. is trying to develop an asset-financ

Guardian Inc. Is trying to develop an asset-financing plan. The firm has $370,000 in temporary...

80.2K

Verified Solution

Question

Finance

image

Guardian Inc. Is trying to develop an asset-financing plan. The firm has $370,000 in temporary current assets and $270,000 In pemanent current assets. Guardian also has $470,000 in fixed assets. Assume a tax rate of 30 percent. a. Construct two alternative financing plans for Guardlan. One of the plans should be conservative, with 70 percent of assets financed by long-term sources, and the other should be aggresslve, with only 56.25 percent of assets financed by long-term sources. The current interest rate Is 12 percent on long-term funds and 8 percent on short-term financing. Compute the annual Interest payments under each plan. Annual Interest servelive Aggressive b. Given that Guardian's earnings before interest and taxes are $250,000, calculate earnings after taxes for each of your alternatives. Earning After Taxes servalivs Aggressive c. What would the annual interest and eanings after taxes for the conservative and aggressive strategies be if the short-term and long-term interest rates were reversed? Conservative Aggressive Total interest Earnings after taxes

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students