EBIT is $10,000 and interest expense is $4,000. If the tax rate is 30%, what is the net income?
A) $3,800
B) $4,200
C) $5,200
D) $8,400
Answer: B
Explanation: B) Taxable Income = EBIT - Interest Expense = $10,000 - $4,000 = $6,000.
Taxes = Tax Rate × Taxable Income = 0.3 × $6,000 = $1,800. Thus, the Net Income = Taxable Income - Taxes = $6,000 - $1,800 = $4,200.
Business
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