Winfrey Diet Food Corp. has $4,500,000 in asset Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and taxes are $960,000.
The tax rate is 40 percent.
Temporary current assets... $1,000,000
Permanent current assets.... 1,500,000
Fixed assets................ 2,000,000
Total assets............ $4,500,000
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?