BG Company has P8,000,000 in current assets, P3,500,000 of which are considered permanent current assets. In addition, the firm has P6,000,000 invested in fixed assets. BG Company wishes to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing costing 15%. Short-term financing currently costs 10%. BG Company’s earnings before interest and taxes are P2,200,000. Income tax rate is 40%.How much would BG Company’s earnings after taxes be under this financing plan? P127,500 P85,000 P225,000 P112,500

BG Company has P8,000,000 in current assets, P3,500,000 of which are considered permanent current assets. In addition, the firm has P6,000,000 invested in fixed assets. BG Company wishes to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing costing 15%. Short-term financing currently costs 10%. BG Company’s earnings before interest and taxes are P2,200,000. Income tax rate is 40%.How much would BG Company’s earnings after taxes be under this financing plan? P127,500 P85,000 P225,000 P112,500

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 1P

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