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Category > Business & Finance Posted 05 Aug 2017 My Price 7.00

FIN 200 Axia College of University of Phoenix (UoP)

FIN 200
Axia College of University of Phoenix (UoP)

Foundations of Financial Management
Block Hirt Danielsen

Introduction to Finance: Harvesting the Money Tree
Fin 200 Week Solution
Chapter 6

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 Guardian. One of the plans should be conservative, with 75 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest rate is 15 percent on long-term funds and 10 percent on short-term financing.
b. Given that Guardian’s earnings before interest and taxes are $200,000, calculate earnings after taxes for each of your alternatives.
c. What would happen if the short- and long-term rates were reversed?

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Status NEW Posted 05 Aug 2017 06:08 PM My Price 7.00

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