Mirha Corp recently reported sales of $950,000. The company also reported cost of goods sold of...
Mirha Corp recently reported sales of $950,000. The company also reported cost of goods sold of $450,000, operating expenses of $250,000, and depreciation and amortization of $40,000. The firm has $2 million of outstanding bonds with a 5% coupon rate. If the company faces a 21% tax rate, what is its net income?
Question 31 options:
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$65,900 |
|
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$86,900 |
|
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$118,500 |
|
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$157,605 |
Homework Answers
Sales = $950,000
COGS = $450,000
Operating expenses = $250,000
Depreciation & Amortization = $40,000
EBIT = Sales - COGS - Operating expenses - Depreciation & Amortization = $210,000
Interest expense = $2,000,000 * 5% = $100,000
Earnings before tax = $210,000 - $100,000 = $110,000
Tax rate = 21%
Net Income = $110,000 * (1 - 21%) = $86,900
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