What will earnings after taxes be

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Question - Colter Steel has $4,600,000 in assets.

Temporary current assets $1,200,000

Permanent current assets 1,510,000

Fixed assets 1,890,000

Total assets $4,600,000

Assume the term structure of interest rates becomes inverted, with short-term rates going to 14 percent and long-term rates 3 percentage points lower than short-term rates. Earnings before interest and taxes are $980,000. The tax rate is 30 percent.

If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?

Reference no: EM133111173

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