6 Help Seve Nighthawk Steel, a manufacturer of specialized tools, has $4,620,000 in assets Temporary current assets Permanent current assets Capital asset $1,040,000 1,540,000 7,000,000 Total assets $4,620,000 Short-term rates are 6 percent. Long-term rates are 8.5 percent. Note that long-term rates imply a return to any equity. Earrings before interest and taxes are $980,000. The tax rate is 25 percent. Assume the term structure of Interest rates becomes inverted with short-term rates going to 11 percent and long term rates 5.5 percentage points lower than short-term rates If long term financing is perfectly matched (hedgec) with long term asset needs, and the same is true of short term financing, what will earnings be after taxes? For an example of perfectly hedged. plans see Egure 68. Earning after taxes