Asked Dec 10, 2019

Little bugs incorporation recently reported 3 million of net income as earnings before interest text was six million and is tax rate was 40% each what was its interest expense


Expert Answer

Step 1

Net Income = $3,000,000

Earnings before Interest and Tax = $6,000,000

Tax Rate = 40% or...


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Net Income Interest Expense = EBIT 1-Tax Rate $3,000,000 = $6, 000, 000 – 1-0.40 $3,000,000 = $6,000, 000 – 0.60 = $6, 000, 000 – $5,000,000 = $1,000,000


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