Nighthawk Steel, a manufacturer of specialized tools, has $4,950,000 in assets. Temporary current assets Permanent current assets Capital assets $1,900,000 1,545,000 1,505,000 Total assets $4,950,000 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 $1,050,000. 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, see Figure 6-8. Earnings after taxes $