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1. Matching asset mix and financing plans. Colter Steel has $4,200,000 in assets. Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before

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1. Matching asset mix and financing plans. Colter Steel has $4,200,000 in assets. Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and taxes are $996,000. The tax rate is 40 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? Please use the most appropriate way of financing. 2. Expectations hypothesis and interest rates: Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, and four years based on the following data. Do an analysis similar to that in the right-hand portion of Table 6-6

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