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Sherlock Homes, a manufacturer of low cost mobile housing, has $5,100,000 in assets. Temporary current...

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Accounting

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Sherlock Homes, a manufacturer of low cost mobile housing, has $5,100,000 in assets. Temporary current assets Permanent current assets Capital assets $2,200,000 1,560, eee 1,340,000 Total assets $5,100,000 Short-term rates are 12 percent. Long-term rates are 17 percent. (Note that long-term rates imply a return to any equilty Earnings before interest and taxes are $1,080,000. The tax rate is 40 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 Alaussee Figute 6-8 Earnings after taxes

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