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. $6,911.84
|Less: Interest||$ 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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