Little Books Inc. recently reported $6 million of net income. Its EBIT was $10.2

Question

Little Books Inc. recently reported $6 million of net income. Its EBIT was $10.2 million, and its tax rate was 40%. What was its interest expense? [Hint: Write out the headings for an income statement and then fill in the known values. Then divide $6 million 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 complete similar Problems.] Write out your answer completely. For example, 25 million should be entered as 25,000,000.

Explanation / Answer

After tax Income 6000000 Before Tax Income =6000000*100/60 10000000 EBIT 10200000 Interest 10200000-10000000 200000

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