The Lansing Lugnuts a minor league baseball team recently reported a net income of $4,000,000. Its Earnings Before Interest and Taxes (EBIT) was $7 million and its tax rate was 25%.

From this information is it True or False that Interest Expense for the year was $1,666.666.67?

(Hint: Write out the headings for an income statement and fill in the known values. Then divide net income by (1 T) = .75 to find the pretax income which is also known as Earnings Before Earnings and Taxes (EBT).

True

False