Final answer:
The after-tax earnings are calculated to be $429 million after applying the 35% tax rate.
Step-by-step explanation:
The Basic Earning Power (BEP) ratio is a financial metric that indicates how well a company can generate earnings before taxes and interest from its assets. To calculate the BEP ratio, you divide the Earnings Before Interest and Taxes (EBIT) by the total assets.
In this case, MPI Incorporated has a BEP of 11%, which means if we know the total assets are $6 billion, we can calculate the EBIT by multiplying 11% (or 0.11) by $6 billion, giving us an EBIT of $660 million.
Considering the tax rate is 35%, we can calculate the after-tax earnings by taking 65% of the EBIT (100% - 35% tax rate), leading to $429 million (0.65 * $660 million).
*complete question
Mpi incorporated has $6 billion in assets, and its tax rate is 35%. its basic earning power (bep) ratio is 11%. What is the after-tax earnings?