Question
Pelamed Pharmaceuticals has EBIT of $190 million in 2011. In addition, Pelamed has interest expenses of $92 million, and a corporate tax rate of 35%.
Pelamed Pharmaceuticals has EBIT of $190 million in 2011. In addition, Pelamed has interest expenses of $92 million, and a corporate tax rate of 35%. a. What is Pelamed's 2011 net income? b. What is the total of Pelamed's 2011 net income plus interest payments? c. If Pelamed had no interest expenses, what would its 2011 net income be? How does it compare to your answer in part (b )? d. What is the amount of Pelamed's interest tax shield in 2011? a. What is Pelamed's 2011 net income? Pelamed's 2011 net income is $ million. (Round to the nearest integer.) b. What is the total of Pelamed's 2011 net income plus interest payments? Pelamed's 2011 net income plus interest payments is $ million. (Round to the nearest integer.) c. If Pelamed had no interest expenses, what would its 2011 net income be? If Pelamed had no interest expenses, Pelamed's 2011 net income is $ million. (Round to the nearest integer.) How does it compare to your answer in part (b )? (Select from the drop-down menu.) It is __________(higher OR lower) (1) than in part (b ). d. What is the amount of Pelamed's interest tax shield in 2011? Pelamed's interest tax shield in 2011 is $ million. (Round to the nearest integer.)
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