### Construct a conservative financing plan

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##### Reference no: EM1315850

Computation of net income.

McKinsee Inc. is developing a plan to finance its asset base. The firm has \$5,000,000 in current assets, of which 20% are permanent, and \$12,000,000 in fixed assets. Long-term rates are currently 9.5%, while short-term rates are at 7%. McKinsee's tax rate is 30%.

Construct a conservative financing plan with 80% of assets financial by long-term sources. If McKinsee's earnings before interest and taxes are \$6,000,000, what will their net income be?

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