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Unformatted text preview: 11,250 long term expenses fixed assets 600,000 permanent current assets 350,000 50% temporary current assets 225,000 Total Long term financing 1,175,000 Interest on long term financing 117,500 total interest cost 128,750 EBIT 200,000 less Interest 128,750 EBT 71250 less taxes 30% 21,375 Earning after taxes 49875 c. The profit in plan B is less than that of plan A, thus making plan A the reccomeded plan when wanting a higher profit. Plan B does offer a less risy plan however. To finance short term there is more of a chance for rates to increase which could put the company into some trouble....
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- Spring '09