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7) Pelamed Pharmaceuticals has EBIT of $133 million in 2006. In addition, Pelamed has interest expenses of $49 million and a corporate tax rate of

7) Pelamed Pharmaceuticals has EBIT of $133 million in 2006. In addition, Pelamed has interest expenses of $49 million and a corporate tax rate of 35%.

a. What is Pelameds 2006 net income?

b. What is the total of Pelameds 2006 net income and interest payments?

c. If Pelamed had no interest expenses, what would its 2006 net income be? How does it compare to your answer in part b?

d. What is the amount of Pelameds interest tax shield in 2006?

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