Nighthawk Steel, a manufacturer of specialized tools, has $$5,400,000$ in assets.

Temporary current assets $$2,800,000$

Permanent current assets $1,590,000$

Capital assets $1,010,000$

Total assets $$5,400,000$

Short$-$term rates are $12$ percent. Long$-$term rates are $17$ percent. $($Note that long$$term rates imply a return to any equity$).$ Earnings before interest and taxes are $$1,140,000.$ 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 $