Temporary current assets

September 12, 2019/in Questions Uploads /by Hannah Wangui

Question

Temporary current assets$2,000,000 Permanent current assets 1,550,000 Fixed assets 1,450,000 Total assets$5,000,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 11 percent and long-term rates 3 percentage points lower than short-term rates. Earnings before interest and taxes are $1,060,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Earnings after taxes$ Hints References eBook & Resources Hint #1

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Guardian Inc.

September 12, 2019/in Questions Uploads /by Hannah Wangui

Question

Guardian Inc. is trying to develop an asset-financing plan. The firm has $440,000 in temporary current assets and

$340,000 in permanent current assets. Guardian also has $540,000 in fixed assets. Assume a tax rate of 30 percent. (Do not round intermediate calculations. Round your answers to the nearest whole number.)

a.

Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 60 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 11 percent on long-term funds and 6 percent on short-term financing. Compute the annual interest payments under each plan.

	Annual Interest
Conservative	$
Aggressive	$

b.	Given that Guardian’s earnings before interest and taxes are $320,000, calculate earnings after taxes for each of your alternatives.

	Earnings After Taxes
Conservative	$
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?

	Conservative	Aggressive
Total interest	$	$
Earnings after taxes	$	$

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interest rates

September 12, 2019/in Questions Uploads /by Hannah Wangui

Question

Temporary current assets$2,000,000 Permanent current assets 1,550,000 Fixed assets 1,450,000 Total assets$5,000,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 11 percent and long-term rates 3 percentage points lower than short-term rates. Earnings before interest and taxes are $1,060,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Earnings after taxes$ Hints References eBook & Resources Hint #1

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Targets stakeholder

September 12, 2019/in Questions Uploads /by Hannah Wangui

Question

Considering the brief description of Targets stakeholder relationships and combine that information with your

experience shopping in a Target store. How might Targets stake holders, in particular its employees, customers, local communities, and suppliers, influence the managers decisions of building competitive advantage in the analysis stage of the AFI framework?