Last year, jackson tires reported net sales of $40 million and total operating costs (including depreciation) of $26 million. it had $75 million of investor-supplied capital, with an after-tax cost of 10%. if the company's tax rate is 40%, how much value did its management create or lose for jackson tire during the year?

Guardian inc. is trying to develop an asset-financing plan. the firm has $450,000 in temporary current assets and $350,000 in permanent current assets. guardian also has $550,000 in fixed assets. assume a tax rate of 40 percent. a. construct two alternative financing plans for guardian. one of the plans should be conservative, with 70 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 12 percent on long-term funds and 7 percent on short-term financing. compute the annual interest payments under each plan.