Plugging in $$10$ million for $NI$ and $20\mathrm{.}00\%$ in for $t$ into the previous formula yields an EBT of $$8$ million.

According to the video, which of the following most accurately describes the relationship between opertaing income $($EBIT$)$ and EBT? $($Hint: Let interest expense be noted as I$).$

EBT$=$EBIT$-I$

EBT$=$EBIT$+I$

EBT$=$EBIT$\frac{x}{x}$I

EBT$=\frac{\text{E}\text{B}\text{I}\text{T}}{\text{I}}$

Plugging in the figure you calculated for EBT and $$13,200,000$ in for EBIT into the previous formula, and solving for I yields an interest expens of $ million.

Step $3$: Practice: Income Statements

Now it's time for you to practice what you've learned.

Suppose that Redwood Books has a reported net income of $$20$ million, an operating income $($EBIT$)$ of $$25\mathrm{.}7$ million, and a tax rate of $20\mathrm{.}00\%.$

Redwood Books has an interest expense of $ million.