Sherlock Homes, a manufacturer of low cost mobile housing, has $4,750,000 in assets. Temporary current assets Permanent current assets Capital assets $1,050,000 1,680,000 2,100,000 Total assets $4,750,000 Short-term rates are 14 percent. Long term rates are 10 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1.010,000. 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 4 percentage points lower than short-term tates. 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 be after taxes? For an example of perfectly hedged plans see Eigure 6_8 Earning after taxes $ Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, and four years based on the following data. (Input your answers as a percent rounded to 2 decimal places Do not round intermediate calculations.) 1 year 7-11 at beginning of year 1 1-year T-billot beginning of year 1-year Tbl at bege of year 1-year tbm at beginning of year 310 2-year security 3-year security Sharpe Knife Company expects sales next year to be $1,500,000 If the economy is strong. $800,000 if the economy is steady, and $500.000 if the economy is weak. Mr. Sharpe believes there is a 20 percent probability the economy will be strong. a 50 percent probability of a steady economy, and a 30 percent probability of a weak economy. What is the expected level of sales for the next year? Expected level of sales $