Problem 6-12 Matching asset mix and financing plans [LO6-3]

Colter Steel has $4,550,000 in assets.

Temporary current assets	$	1,100,000
Permanent current assets		1,505,000
Fixed assets		1,945,000
Total assets	$	4,550,000

Short-term rates are 7 percent. Long-term rates are 12 percent. Earnings before interest and taxes are $970,000. The tax rate is 20 percent.

If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?

Earnings after taxes will be _______