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Currently, Atlas Tours has $6.12 million in assets. This is a peak six-month period. During the other six months, temporary current assets drop to $490,000.
Currently, Atlas Tours has $6.12 million in assets. This is a peak six-month period. During the other six months, temporary current assets drop to $490,000. Temporary current assets Permanent current assets Capital assets $1,290,000 1,980,000 2,850,000 Total assets $6,120,000 Short-term rates are 4 percent. Long-term rates are 5 percent. Annual earnings before interest and taxes are $1,170,000. 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 5 percent when assets are at their lowest level, what will earnings after taxes be? For an example of perfectly hedged plans, see Figure 6-8 Earnings after taxes $
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