Question: Dharma Supply has earnings before interest and taxes EBIT of

Dharma Supply has earnings before interest and taxes (EBIT) of $500,000, interest expenses of $300,000, and faces a corporate tax rate of 35 percent.
a. What is Dharma Supply’s net income?
b. What would Dharma’s net income be if it didn’t have any debt (and consequently no interest expense)?
c. What are the firm’s interest tax savings?


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  • CreatedOctober 31, 2014
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