Sherlock Homes, a manufacturer of low cost mobile housing, has $5,400,000 in assets. Temporary current assets Permanent current assets Capital assets $2,800,000 1,590,000 1,010,000 Total assets $5,400,000 Short-term rates are 12 percent. Long-term rates are 17 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,140,000. 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 6-8. Earnings after taxes $