Identify Profit Before Interest and Tax based on following:

Profit After tax Rs 60,000
15% long term debts ₹ 10,00,000
Tax rate 40%

₹2,50,000

The correct answer is Option (4) - 2,50,000.

Profit after tax = ₹60,000
Tax rate = 40%
Profit before tax = 60,000 x 100/60
                        = ₹1,00,000

15% interest on debenture = 10,00,000 x 15/100
                                        = ₹1,50,000

Profit before interest and tax = Profit before tax + Interest on debentures
                                          = 1,00,000 + 1,50,000
                                          = ₹2,50,000