Dharma Supply has earnings before interest and taxes (EBIT) of $591,000, interest expenses of $255,000 and faces a corporate tax rate of 36 percent.

Question

Dharma Supply has earnings before interest and taxes (EBIT) of $591,000, interest expenses of $255,000 and faces a corporate tax rate of 36 percent.
a. What is Dharma Supply's Net Income?
b. what would dharmas net income be if it didn't have any debt?
c. what are the firms interest tax savings?

Henry · Answer

a. Net Income = 591,000 - 255,000 - 0.36*591,000 = b. $591,000. c. 0.36 * 591000 =