Problem 6-13 Impact of term structure of interest rates on financing plans [LO4] 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 Assume theterm 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 $996,000. The tax rate is40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the sameis true of short-term financing, what will earnings after taxes be? Input variables: $1,000,000 $2,000,000 $1,200,000 $4,200,000 Temporary current assets Permanent current assets Fixed assets Assets Short-term rates Long-term rate differential EBIT Tax rate 0.11 percent 0.05 percent $996,000 0.40 percent