Profit after tax and interest is ₹1,60,000.
Tax rate is 20%.
10% long term borrowing is ₹20,00,000.
Find profit before tax and after interest.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹2,00,000.
Profit after tax and interest = ₹1,60,000.
Tax rate = 20%
Profit before tax = Profit after tax and interest x [100/(100-Tax rate)]
= 1,60,000 x 100/80
= 2,00,000
Profit before tax and after interest = Profit before tax
= 2,00,000