1. Matching asset mix and financing plans. Colter Steel has $4,200,000 in assets.

Temporary current assets	$1,000,000
Permanent current assets	2,000,000
Fixed assets	1,200,000
Total assets	$4,200,000

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.