Explain the long-term rates


Matching asset mix and financing plans Winfrey Diet Food Corp. has $4,500,000 in assets.Temporary current assets $1,000,000 Permanent current assets 1,500,000 Fixed assets 2,000,000 Total assets $4,500,000 Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and taxes are $960,000. The tax rate is 40 percent. If long-term financing is perfectly matched with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?

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Humanities: Explain the long-term rates
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