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Molteni Motors Inc. recently reported $6 million of net income. Its EBIT was $13 million, and its...

Question:

Molteni Motors Inc. recently reported $6 million of net income. Its EBIT was $13 million, and its tax rate was 40%. What was its interest expense?

Earnings Before Interest and Tax:

Earnings before interest and tax are the earnings that take into consideration all the operating and non operating expenses except interest and income tax expenses. EBIT = Revenues - expenses including depreciation and amortization. Operating profit and EBIT are the same.

Answer and Explanation:

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Interest expense is $3,000,000

Since we know the net income and EBIT, to find out interest we have to do reverse calculations starting from net...

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How to Calculate Interest Expense: Formula & Example

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Chapter 5 / Lesson 18
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This lesson will provide the formula for how to calculate interest expense. This lesson will also explain the phrase and provide a sample calculation.


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