PROBLEM #13, page 184
Sherlock Homes, a manufacture of low cost mobile housing, has $4,500,000 in assets.
Temporary current assets		$ 1,000,000.00
Permanent current assets		1,500,000.00
Capital assets		2,000,000.00
TOTAL assets		$ 4,500,000.00
Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and taxes are $960,000. 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 68.
Note: Solution for Earnings before taxes is supposed to be $425,000