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%
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹2,50,000
Net profit before tax = profit after tax × 100/(100 − tax rate)
= ₹60,000 × 100/60 = ₹1,00,000
Interest on long-term debt = 15% of ₹10,00,000 = ₹1,50,000
Profit before interest and tax = ₹1,00,000 + ₹1,50,000 = ₹2,50,000
NCERT (2026-27 edition):
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