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Posted on Jul 29, 2024

Pelamed Pharmaceuticals had EBIT of $299 million in 2010. In addition, Pelamed had interest expenses of $95 million and a corporate tax rate of 35%.

a. What is Pelamed's 2010 net income?

b. What is the total of Pelamed's 2010 net income plus interest payments?

c. If Pelamed had no interest expenses, what would have been its 2010 net income? How does it compare to your answer in part (a)?

d. What is the amount of Pelamed's interest tax shield in 2010?

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