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Boston Inc. recently reported $125,000 of sales, $75,500 of operating costs other than depreciation, and $10,200...
Boston Inc. recently reported $125,000 of sales, $75,500 of operating costs other than depreciation, and $10,200 of depreciation. The company had $16,500 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's net income? The firm uses the same depreciation expense for tax and stockholder reporting purposes. (Round your intermediate and final answers to two decimal places.)
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Expert Solution
| A | Sales | $ 125,000.00 |
| B | Operating Costs other than Depreciation | $ (75,500.00) |
| A-B=C | Earning before Depreciation | $ 49,500.00 |
| D | Depreciation | $ (10,200.00) |
| C-D=E | Earning before Interest and after Depreciation | $ 39,300.00 |
| F | Interest ($16500*7.25%) | $ (1,196.25) |
| E-F=G | Income before tax | $ 38,103.75 |
| H | Tax (40%) | $ (15,241.50) |
| G-H=I | Net Income after tax | $ 22,862.25 |
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