Meme Inc's book value of assets is R1 450 000, which is financed with R600 000 in debt and R850 000 in equity. The firm's before-tax cost of debt is 7.10% and its tax rate is 30%. Meme's cost of equity is 11.40%. The following is a summary of its income statement. Partial income statement for Meme Inc Earnings before interest and taxes (EBIT) R142 000 Less: interest expense (20 000) Pretax income 122 000 Less: income tax expense (36 600) Net income R85 400 Determine whether Meme Inc is profitable by calculating its residual income