Currently, Atlas Tours has $$6\mathrm{.}76$ million in assets. This is a peak six$-$month period. During the other six months, temporary current assets drop to $$570,000.$

Temporary current assets $$1,370,000$

Permanent current assets $2,140,000$

Capital assets $3,250,000$

Total assets $$6,760,000$

Short$-$term rates are $5$ percent. Long$-$term rates are $7$ percent. Annual earnings before interest and taxes are $$1,250,000.$ The tax rate is $38$ percent.

a$.$ If the assets are perfectly hedged throughout the year, what will earnings after taxes be$?($Enter answers in whole dollar, not in million.$)$

Earnings after taxes $

b$.$ If short$-$term interest rates increase to $7$ percent when assets are at their lowest level, what will earnings after taxes be$?$ For an example of perfectly hedged plans, see Figure $68$

Earnings after taxes