Question

Quicker bricks company $5200000 in asset that need financing Temporary current asset $1500000 Permanent current asset 2000000 Capital assets 1700000 Total assetes 5200000 Short term rate 9 percent Long term rate 18 percent Earnings before interest and taxes are $1089000. The tax rate is 35 percent. If qucker bricks is the following a more conservative approach with long term fianancing sources being used for both long term asset and 40% of temporary current asset what will be EAT be?You need find Long Term Financing, Needed Short Term Financing, Needed Long Term Interest Expense, Short Term Interest Expense, EBIT, Interest, EBT and Taxes

Answer 1

	Temporary Current Assets	1,500,000.00
	Permanent Current Assets	2,000,000.00
	Fixed Assets	1,700,000.00
	Total Assets	5,200,000.00
	Step 1
	Long Term Financing	Amount	Rate of Interest	Interest
	Permanent Current Assets	2,000,000.00
	Fixed assets	1,700,000.00
		3,700,000.00	18%	666,000.00
	Step 2
	Short Term Financing	Amount
	Temporary Current assets	1,500,000.00	9%	135,000.00
			Total Interest	801,000.00
	Step 3
	Calculation of Earnings after Tax
	EBIT	1,089,000.00
	Interest	801,000.00
	EBT	288,000.00
	TAX	100,800.00
Answer	Earnings after Tax	187,200.00