Homework Answers
Total short term liabilities = $1800,000
Interest on short term liabilities = $1800,000*14% = $252,000
Total Long term liabilities (1,540,000+1,560,000)= $3,100,000
Interest on Total Long term liabilities = $3,100,000*10% =$310,000
Total interest expense = $310,000 + $252,000 = $562,000
Earnings before interest and taxes = $1,040,000
:Less: Interest Expense = $562,000
Earnings before tax = $478,000
Less Income Tax(30%) = $143,400
Earnings after taxes = $334,600
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