Question

Holly farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400. the tax rate is 28 percent. how much net income did the firm earn for the period? $5,886 $8,671 $9,324 $7,778 $10,380

Answer 1

Sales = 509,600

Costs = 448,150

Gross profit = Sales - Costs

Gross profit = 509600-448150 = 61,450

Depreciation expense = 36,100

EBIT = Gross profit - Depreciation

EBIT = 61,450 - 36,100 = 25,350

Interest = 12,400

EBT = EBIT - Interest expense = 25,350 -12,400 = 12,950

Net income = EBT*(1-tax rate)

Net Income = 12,950*(1-0.28) = 9,324

Net Income = $9,324