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Nighthawk Steel, a manufacturer of specialized tools, has $ 5 , 4 0 0 , 0 0 0 in assets. Short - term rates are
Nighthawk Steel, a manufacturer of specialized tools, has $ in assets.
Shortterm rates are percent. Longterm rates are percent. Note that longterm rates imply a return to any equity Earnings
before interest and taxes are $ The tax rate is percent.
If longterm financing is perfectly matched hedged with longterm asset needs, and the same is true of shortterm financing, what will
earnings after taxes be For an example of perfectly hedged plans, see Figure
Earnings after taxes
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