Question

Meric Mining Inc. recently reported $19,750 of sales, $7,500 of operating costs other than depreciation, and...

Meric Mining Inc. recently reported $19,750 of sales, $7,500 of operating costs other than depreciation, and $1,200 of depreciation. The company had no amortization charges, it had outstanding $6,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%.

How much was the firm's net income after taxes? Meric uses the same depreciation expense for tax and stockholder reporting purposes.

Select the correct answer. a. $6,931.64 b. $6,938.24 c. $6,925.04 d. $6,918.44 e. $6,911.84

Homework Answers

Answer #1
Sales $           19,750.00
Less:
Costs $             7,500.00
Depreciation $             1,200.00
EBIT $           11,050.00
Less: Interest $                406.25 =6500*6.25%
Profit before tax $           10,643.75
Less: Tax $             3,725.31
Net income $ 6,918.44
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