From the following details,The net profit before interest and tax is..
Net Profit after tax is ₹60,000
10% Long-term debt ₹10,00,000
Tax rate 40%
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹2,00,000.
* Net profit after tax = 60,000
10% Long-term debt ₹10,00,000
Tax rate = 40%
Profit before tax = 60,000 x 100/60
= ₹1,00,000
Interest on debt = 10,00,000 x 10/100
= 1,00,000
So profit before interest & tax = 1,00,000 + 1,00,000
= 2,00,000