Sherlock Homes, a manufacturer of low cost mobile housing, has $5,150,000 in assets. Temporary current assets Permanent current assets Capital assets $2,300,000 1,565,00 1,285,000 Total assets $5,150,000 Short-term rates are 7 percent. Long-term rates are 12 percent. (Note that long-term rates imply a return to any equity) Earnings before interest and taxes are $1,090,000. The tax rate is 20 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 SE