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Nighthawk Steel, a manufacturer of specialized tools, has $5,250,000 in assets. Temporary current annet Permanent...

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Nighthawk Steel, a manufacturer of specialized tools, has $5,250,000 in assets. Temporary current annet Permanent current at Capital annet $2,500,000 1.575,000 1.175.000 Total assets $5,250,000 Short-term rates are 9 percent. Long-term rates are 14 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,110,000. The tax rate is 40 percent. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? For an example of perfectly hedged plans ses Figure 6-8. Earnings after taxes SENARAINE

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