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Sherlock Homes, a manufacturer of low cost mobile housing, has $4,700,000 in assets. Temporary current assets Permanent current assets Capital assets $1,400,000 1,520,000 1,750,000 Total
Sherlock Homes, a manufacturer of low cost mobile housing, has $4,700,000 in assets. Temporary current assets Permanent current assets Capital assets $1,400,000 1,520,000 1,750,000 Total assets $4,700.000 Short-term rates are 10 percent. Long-term rates are 15 percent. (Note that long-term rates imply a return to any equity) Earnings before interest and taxes are $1,000,000. The tax rate is 20 percent if long-term financing is perfectly matched thedged) 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 bedoed plans.see Egure 6-8 Earnings after taxes
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