Question: A. Please see the table below: All figures are in S million (10 Marks) Firm A EBIT 100 Interest 40 Pre- Tax Income 60 Tax
A. Please see the table below: All figures are in S million (10 Marks) Firm A EBIT 100 Interest 40 Pre- Tax Income 60 Tax 35% of pre-tax ? income I ? Net Income Firm B 100 0 100 ? ? Complete the table and then recalculate the figures assuming that Firm A has to make interest payments of $ 60 Million. a. What happens to taxes paid? b. Does Net Income fall by the additional $20 Million interest payment compared to the figures shown in the table above where interest expense was only $40 Million
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