eBook

Problem Walk$-$Through

Byron Books Inc. recently reported $$6$ million of net income. Its EBIT was $$11\mathrm{.}1$ million, and its tax rate was $25\%.$ 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 of net income by $(1-T)=0\mathrm{.}75$ to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same procedure to complete similar problems.$)$ Write out your answer completely. For example, $25$ million should be entered as $25,000,000.$ Round your answer to the nearest dollar, if necessary. Do not round intermediate calculations.

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