Nighthawk Steel, a manufacturer of specialized tools, has $4,200,000 in assets. Temporary current assets Permanent current assets Capital assets $1,000,000 2,000,000 1,200,000 Total assets $4,200,000 Short-term rates are 4 percent. Long-term rates are 65 percent. (Note that long-term rates imply a return to any equity). Eorings before interest and taxes are $860,000. The tax rates 25 percent. Assume the term structure of interest rates becomes inverted, with short-term rates going to 9 percent and long-term rates 45 percentage points lower than short-term rates 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 be after taxes? For an example of perfectly hedged longer. Figure 6-8 Earning after taxes $ 459,000.00