Sher Homes, a manufacturer of low-cost mobile housing, has $4,950,000 in assets. Temporary current assets $1,900,000 Permanent current assets 1,545,000 Capital...

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Sher Homes, a manufacturer of low-cost mobile housing, has$4,950,000 in assets.
  Temporary current assets $1,900,000
  Permanent current assets 1,545,000
  Capital assets 1,505,000

  Total assets $4,950,000

Short-term rates are 9 percent. Long-term rates are 14 percent.(Note that long?term rates imply a return to any equity). Earningsbefore interest and taxes are $1,050,000. The tax rate is 40percent.
If long-term financing is perfectly matched (hedged)with long-term asset needs, and the same is true of short-termfinancing, what will earnings after taxes be?

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Sher Homes, a manufacturer of low-cost mobile housing, has$4,950,000 in assets. Temporary current assets$1,900,000 Permanent current assets1,545,000 Capital assets1,505,000 Total assets$4,950,000 Short-term rates are 9 percent. Long-term rates are 14 percent.(Note that long?term rates imply a return to any equity). Earningsbefore interest and taxes are $1,050,000. The tax rate is 40percent.If long-term financing is perfectly matched (hedged)with long-term asset needs, and the same is true of short-termfinancing, what will earnings after taxes be?


Temporary current assets	$1,900,000
Permanent current assets	1,545,000
Capital assets	1,505,000

Total assets	$4,950,000