jack Steels manufactures steel parts for mining equipment. The company currently has the following assets:

Temporary current assets	$3,000,000
Permanent current assets	1,600,000
Capital assets	900,000
Total assets	$5,500,000

CFO of jack Steels determined that available short-term interest rates are 8 percent and long-term rates are 13 percent (long‐term rates imply a return to any equity). Earnings before interest and taxes are $1,160,000 and the corporate 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?

Earnings after taxes = $ ____

Answer rating: 100% (QA)

Step 13 Total long term financing Permanent current assets Fixed as... View the full answer