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Arlecino [84]
3 years ago
6

Holly Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400. The tax rat

e is 28 percent. How much net income did the firm earn for the period
Business
1 answer:
padilas [110]3 years ago
6 0

<u>Given:</u>

Sales = $509,600

Costs = $448,150

Depreciation = $36,100

Interest = $12,400

Tax = 28%

<u>To find:</u>

Net income

<u>Solution:</u>

To find the net income, initially we have to find the EBIT.

\text{EBIT = Sales - Cost - Depreciation }= \$509,600 - \$448,150 - \$36,100 = \$25350

Now, we have to calculate EBT by subtracting the interest paid.

\text{EBT = EBIT - Interest paid} = \$25350-\$12400= \$12950

The net income is derived by deducting the tax from EBT.

\text{Net income = EBT - Tax}=\$12950-\$3626=\$9324

Therefore, the net income is $9324.

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