Sherlock Homes, a manufacturer of low-cost mobile housing, has $4.900,000 in assets Temporary current assets Permanent current assets Capital assets $1,980,000 1,660, eee 2,160,000 Total assets $4,900,000 Short-term rates are 12 percent. Long-term rates are 8 percent. (Note that long-term rates imply a return to any equity). Earnings before Interest and taxes are $1,040.000. The tax rate is 40 percent. Assume the term structure of interest rates becomes inverted, with short- term rates going to 12 percent and long-term rates 4 percentage points lower than short-term rates. 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 Figure 6-8 Earning after taxes $