Answer the questions on the basis of the information given below.

Company X
TOTAL FUND USED = 30 LAKHS

Choose the correct answer from the options given below:

The Earning After Tax (EAT) for Situation I will be:

₹2,80,000

The correct answer is option 1- ₹2,80,000.

In situation 1, there is no debt in total ₹30 lakh funds so there is no interest payment.

         EBIT = 4,00,000 
less: Interest = NIL
         EBT 4,00,000 (Earnings before taxes)
less: Tax 1,20,000 
         EAT 2,80,000

Thus, Earning after tax is ₹2,80,000.