Nighthawk Steel, a manufacturer of speelolized tools, has $4,550,000 in assets. Short-term rates are 7...
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Nighthawk Steel, a manufacturer of speelolized tools, has $4,550,000 in assets. 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 $970,000. The tax rate is 20 percent. Uf 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? Eor an examnle of perfectly hedged olons, see. Figure 68. Earnings after taxes
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