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28 May, 01:17

Butterfly tractors had $14 million in sales last year. cost of goods sold was $8.00 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm's tax rate was 35%.

a. what was the firm's net income?

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  1. 28 May, 01:40
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    The net income is $1.95 million, this is how we calculate this;

    Sales last year is $14 million

    Goods sold cost = $8 million

    Depreciation expense = $2 million and debt is $1 million.

    So the amount left = $14 million - ($8million + $2 million + $1 million) = 14 - 11 = 3 million

    tax rate is 35 %, so 35% of 3 million = 0.35 x 3 = $1.05 million

    Net income = $3 million - $1.05 million = $1.95 million
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