Question 1 (40 marks) Summit Inc. is developing a plan to finance its asset base, the details of which are listed below. $ $ Current assets Proportion of current assets which are permanent Capital assets Long-term interest rates Short-term interest rates Corporate tax rate EBIT 160,000 20% 1,200,000 10.5% 5.0% 25% 4,300,000 a) Construct a perfectly hedged financing plan. What will Summit's net income be? b) A finance manager has proposed an alternative financial plan. Use the information from part a except for what is listed below. What will net income be under this alternative? 60% Proportion of assets financed with long-term financining Remainder financed with short-term financing c) Would you consider the perfectly hedged plan to be more or less risky than the alternative plan in part b