Question
Pelamed Pharmaceuticals had EBIT of $325 million in 2018. In addition, Pelamed had interest expenses of $125 million and a corporate tax rate of 25%.
Pelamed Pharmaceuticals had EBIT of $325 million in 2018. In addition, Pelamed had interest expenses of $125 million and a corporate tax rate of 25%.
a. What is Pelamed's 2018 net income?
b. What is the total of Pelamed's 2018 net income plus interest payments?
c. If Pelamed had no interest expenses, what would have been its 2018 net income? How does it compare to your answer in part (a)?
d. What is the amount of Pelamed's interest tax shield in 2018?
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Applied Quantitative Finance
Authors: Härdle
3rd Edition
3662544857, 978-3662544853
