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11) C. F. Lee Inc. has the following income statement. How much after-tax operating income does...

11)

C. F. Lee Inc. has the following income statement. How much after-tax operating income does the firm have?

Sales $3,200.00
Costs 1,850.00
Depreciation 192.00
EBIT $1,158.00
Interest expense 285.00
EBT $873.00
Taxes (25%) 218.25
Net income $654.75
a. $900.25
b. $821.03
c. $868.50
d. $583.36
e. $835.43
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Answer #1

Answer

After tax Operating Income also known as NOPAT

Which is equal to EBIT * (1 – tax rate)

= 1,158 * (1 – 0.25)

= 1,158 * 0.75

= $868.50

Option c $868.50 is the correct option

Note: Interest expense is a non-operating expense and hence not considered

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