Computing interest tax savings dharma supply has earnings


(Computing interest tax savings) Dharma Supply has earnings before interest and taxes (EBIT) of $556,000, interest expenses of $322,000 and faces a corporate tax rate of 36 percent.

a. What is Dharma Supply's net income?

b. What would Dharma's net income be if it didn't have any debt (and consequently no infest expense)?

c. What are the firm's interest tax savings?

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Financial Management: Computing interest tax savings dharma supply has earnings
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