3. Colter Steel has $5,500,000 in assets.

Temporary current assets $ 3,000,000 Permanent current assets $1,600,000 Fixed assets 900,000 Total assets 5,500,000

Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and taxes are $1,160,000. 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?

Earnings After Taxes ________

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4. Carmens Beauty Salon has estimated monthly financing requirements for the next six months as follows:

January $10,400 April $10,400 February 4,400 May 11,400 March 5,400 June 6,400

Short-term financing will be utilized for the next six months. Projected annual interest rates are:

January 8% April 15%

February 9 May 12

March 12 June 12

What long-term interest rate would represent a break-even point between using short-term financing and long-term financing? (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent. Input your answer as a percent rounded to 2 decimal places.)

Interest Rate __________%