Nighthawk Steel, a manufacturer of specialized tools, has $5,150.000 in assets. Torporary current assets Permanent current assots Capital assets $1,139,899 1,764,892 2,2641,2 $5,152, ea Total assets Short-term rates are 4 percent. Long term rates are 6.5 percent. Note that long term rates imply a return to any cquity). Earnings betore interest and taxes are $1,090,000. The tax rate is 40 percent Assume the term structure of interest rates becomes Inverted, with short-term rates going to 14 percent and long-term rates 10 percentage points lower than short-term rates. if long-term financing is perfectly matched (nedged) 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 Figure 6-8. Eaming after taxes $1