Question
A firm reports earnings before interest and tax (EBIT) of $100 million and net income of $25 million. If the firm pays tax at the
A firm reports earnings before interest and tax (EBIT) of $100 million and net income of $25 million. If the firm pays tax at the rate of 25%, which of the following comes closest to the amount of interest that the firm pays on its debt?
| A. | The firm pays $0.00 million of interest on the debt. | |
| B. | The firm pays $50.00 million of interest on the debt. | |
| C. | The firm pays $75.00 million of interest on the debt. | |
| D. | The firm pays $23.33 million of interest on the debt. | |
| E. | The firm pays $66.67 million of interest on the debt. |
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Fundamentals Of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
4th Edition
9780132138079
