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1 mark

Net Profit after tax Rs. 60,000; 10% Long-term debt Rs.10,00,000; and Tax rate 40%. The net profit before interest and tax is:

  1. A
    Rs. 1,50,000
  2. B
    Rs. 2,50,000.
  3. C
    Rs.200,000.
  4. D
    Rs.100,000

Solution & Step-by-step Explanation

Let's calculate backwards from Net Profit After Tax (PAT) to Net Profit Before Interest and Tax (EBIT):Find Net Profit Before Tax (PBT):



Find Interest Expense:

Find EBIT (Net Profit Before Interest and Tax):

Practice this question

Try it yourself before checking the explanation above.

Net Profit after tax Rs. 60,000; 10% Long-term debt Rs.10,00,000; and Tax rate 40%. The net profit before interest and tax is:
A
Rs. 1,50,000
B
Rs. 2,50,000.
C
Rs.200,000.
D
Rs.100,000

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