Hollys Art Galleries recently reported $7.9 million of net income. Its EBIT was $13 million, and its
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Holly’s Art Galleries recently reported $7.9 million of net income. Its EBIT was $13 million, and its federal tax rate was 21% (ignore any possible state corporate taxes). What was its interest expense? Write out the headings for an income statement and then fill in the known values. Then divide $7.9 million net income by 1 - T = 0.79 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense. Use this procedure to work some of the other problems.
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Corporate Finance A Focused Approach
ISBN: 978-1337909747
7th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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