Pelamed Pharmaceuticals had EBIT of $325 million in 2018. In addition, Pelamed had interest expenses of $125

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Pelamed Pharmaceuticals had EBIT of $325 million in 2018. In addition, Pelamed had interest expenses of $125 million and a corporate tax rate of 25%.
a. What was Pelamed’s 2018 net income?
b. What was the total of Pelamed’s 2018 net income and interest payments?
c. If Pelamed had no interest expenses, what would its 2018 net income have been? How does it compare to your answer in part (b)?
d. What was the amount of Pelamed’s interest tax shield in 2018?

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Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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