Ask Question
18 May, 02:06

Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $6.25 million, and its tax rate was 35%. What was its interest expense? (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $3.25 million net income by 1 - T = 0.65 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 million should be entered as 1,200,000. Round your answer to the nearest dollar.

+4
Answers (1)
  1. 18 May, 02:26
    0
    Interest = $1250000

    Explanation:

    We know that:

    EBIT

    interest (-)

    =earnings before taxes

    tax (-)

    =Net profit

    EBIT = 6250000

    Interest=?

    t = 0,35

    Net profit = 3250000

    interest = [netprofit / (1-t) ] - EBIT

    interest = (3250000/0,65) - 6250000

    interest = 1250000

    Tax = (EBIT-interest) * 0,35 = 1750000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $6.25 million, and its tax rate was 35%. What was its ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers