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Emery Mining Inc. recently reported $150,000 of sales, $75,500 of cost of goods sold, and $10,200 of depreciation. The company has $16,500 of outstanding bonds that carry a 7.25% interest rate, and its income tax rate was 35%. How much was the firm's net income

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Answer:

The firm's net income was $41,017.4375

Explanation:

The company has $16,500 of outstanding bonds that carry a 7.25% interest rate.

The interest expense of the company = $16,500 x 7.25% = $1,196.25

Income before tax = Sales - cost of goods sold - depreciation expense - interest expense =  $150,000 - $75,500 - $10,200 - $1,196.25 = $63,103.75

Emery Mining Inc.'s  income tax rate was 35%.

Tax = Income before tax x 35% = $63,103.75 x 35% = $22,086.3125

Net income = Income before tax - Tax = $63,103.75 - $22,086.3125 = $41,017.4375

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