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In: Finance

XYZ Inc., has sales of $800,000, costs of $375,000, depreciation expense of $85,000, interest expense of $50,000, and a tax rate of 35%.

XYZ Inc., has sales of $800,000, costs of $375,000, depreciation expense of $85,000, interest expense of $50,000, and a tax rate of 35%. What is the net income of this firm? (10 Points)

The income statement for the company is

(Use Excel and Excel Formulas to answer)  

Solutions

Expert Solution

Sales 800000
Cost 375000
gross Profit 425000
operating Expense 85000
Operating Income 340000
Interest Expense 50000
EBT 290000
Tax 101500
Net Income 188500

Net Income = EBT - Tax
Sale -cost = GP
GP - operating expense = operating INcome

EBT = Operating income- interest expense
Depreciation is a operating expense
Tax is calculated on EBT = 290000 * 35% = 101500


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