Little Books Inc. recently reported $3 million of net income. Its EBIT was $6 million, and its tax rate was 40%. What was its interest expense? [Hint: Write out the headings for an income statement and fill in the known values. Then divide $3 million of net income by (1 " T) ! 0.6 to find the pretax income. The difference between EBIT and taxable income must be the interest expense. Use this same procedure to com￾plete similar problems.]

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
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Little Books Inc. recently reported $3 million of net income. Its
EBIT was $6 million, and its tax rate was 40%. What was its interest expense? [Hint: Write
out the headings for an income statement and fill in the known values. Then divide $3
million of net income by (1 " T) ! 0.6 to find the pretax income. The difference between
EBIT and taxable income must be the interest expense. Use this same procedure to com￾plete similar problems.]

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