Currently, Atlas Tours has $6.28 million in assets. This is a peak six-month period. During the...

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Currently, Atlas Tours has $6.28 million in assets. This is a peak six-month period. During the other six months temporary current assets drop to $510,000. Temporary current assets Permanent current assets Capital assets $1,310,000 2,020,000 2,950,000 Total assets $6,280,000 Short-term rates are 5 percent. Long-term rates are 7 percent. Annual eamings before interest and taxes are $1,190,000. The tax rate is 38 percent. a. If the assets are perfectly hedged throughout the year, what will earnings be after taxes? Earmings after taxes b. If short-term interest rates increase to 7 percent when assets are at their lowest level, what will earnings be after taxes? Eamings after taxes Currently, Atlas Tours has $6.28 million in assets. This is a peak six-month period. During the other six months temporary current assets drop to $510,000. Temporary current assets Permanent current assets Capital assets $1,310,000 2,020,000 2,950,000 Total assets $6,280,000 Short-term rates are 5 percent. Long-term rates are 7 percent. Annual eamings before interest and taxes are $1,190,000. The tax rate is 38 percent. a. If the assets are perfectly hedged throughout the year, what will earnings be after taxes? Earmings after taxes b. If short-term interest rates increase to 7 percent when assets are at their lowest level, what will earnings be after taxes? Eamings after taxes

Answer rating: 100% (QA)

Earnings after taxes 493892 Earnings after taxes 490730 Explanat... View the full answer