Homework Answers
A.EBIT =$600,000
Less: interest = (1,000,000+375000)*10% +(1,800,000-375,000)*5% =$208,750
Earnings before tax =$391,250
Less: tax =$391250*30% =$117,375
Earnings after taxes =$273,875
B. EBIT =$600,000
Less: interest (1,000,000+750,000+525000)*10% + 525000*5% =$253750
Earnings before tax =$346,250
Less: tax =$103,875
Earning after tax =$242,375
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