Hicks Health Clubs Inc. expects to generate an annual EBIT of $512000 and needs to obtain financi Show more Hicks Health Clubs Inc. expects to generate an annual EBIT of $512000 and needs to obtain financing for $1010000 of assets.
Their tax bracket is 32%. If the firm goes with a short-term financing plan their rate will be 7.0 percent and with a long-term financing plan their rate will be 8.0 percent. By how much will their earnings after tax change if they choose the more aggressive financing plan instead of the more conservative? (Amounts in parentheses indicate negative value.) Show less
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