Consider the following short income statement (in millions): Operating income before taxes ..........$100 Interest expense before taxes

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Consider the following short income statement (in millions):

Operating income before taxes ………………………..........$100

Interest expense before taxes ………………………….............10

Tax expense …………………………………………..........................25

Net income ……………………………………………......................$65

The statutory tax rate is 35 percent. What is the effective tax rate on net income before tax? What is the effective tax rate on operating income?

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Financial Statement Analysis and Security Valuation

ISBN: 978-0078025310

5th edition

Authors: Stephen Penman

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Question Posted: Aug 25, 2017 02:12 AM

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Consider the following short income statement (in millions): Operating income before taxes ..........$100 Interest expense before taxes

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Income before tax 100 10 90 million Effective tax rate o...View the full answer

Financial Statement Analysis and Security Valuation

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