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Sherlock Homes, a manufacturer of low cost mobile housing, has $5,500,000 in assets Temporary current assets Permanent current assets Capital assets $3,000,000 1,600.000 900,000 Total
Sherlock Homes, a manufacturer of low cost mobile housing, has $5,500,000 in assets Temporary current assets Permanent current assets Capital assets $3,000,000 1,600.000 900,000 Total assets $5,500,000 Short-term rates are 8 percent. Long-term rates are 13 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1160,000. The tax rate is 30 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 Eloute 6.8. Earnings after taxes $
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