Molteni Motors Inc. recently reported $3 million of net income. Its EBIT was $7.5 million, and its tax rate was 40%. What was its interest expense? (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $3 million net income by 1 − T = 0.6 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense.) Round your answer to the nearest dollar. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.
Income Statement:
EBIT |
7.5 million |
Less: Interest |
2.5 million |
EBT |
5 million |
Less: Tax @40% |
2 million |
Net Income |
3 million |
EBT = Net Income/0.6 = 5 million
Interest Expense = EBIT – EBT = $2.5 million i.e $2,500,000
Molteni Motors Inc. recently reported $3 million of net income. Its EBIT was $7.5 million, and...
Molteni Motors Inc. recently reported $3.5 million of net income. Its EBIT was $5.5 million, and its tax rate was 30%. What was its interest expense? (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $3.5 million net income by 1 -T-0.7 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense.) Enter your answer in dollars. For example, an answer of $1.2 milion...
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Molteni Motors Inc. recently reported $2.25 million of net income. Its EBIT was $7 million, and its tax rate was 40%. What was its interest expense? Round your answer to the nearest dollar. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.
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