Question

 
      Temporary current assets$1,400,000    Permanent current assets 1,520,000    Fixed assets 1,780,000         Total assets$4,700,000      Assume the term structure of interest rates becomes inverted, with short-term rates going to 11 percent and long-term rates 5 percentage points lower than short-term rates. Earnings before interest and taxes are $1,000,000. The tax rate is 20 percent.   If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?     Earnings after taxes$   

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