Tax Deductible Expenses EBIT Less Interest expense Earning before tax Less: Taxes: (40%) Earnings After Tax Change in earnings after Taxes Tax Deductible Expenses EBIT Less Interest expense Earning before tax Less: Taxes: (40%) Earnings After Tax Change in earnings after Taxes Tax Deductible Expenses EBIT Less Interest expense Earning before tax Less: Taxes: (40%) Earnings After Tax Change in earnings after Taxes Problem One With Debt $200,000 $30,000 Problem Two With Debt $250,000 $50,000 Problem Three With Debt $400,000 $80,000 Without Debt $200,000 50 $200,000 Without Debt $250,000 Without Debt $400,000 $0