Question

Russell Securities has $100 million in total assets and its corporate tax rate is 40 percent. The company recently reported that its basic earning power (BEP) ratio was 15 percent and that its return on assets (ROA) was 9 percent. What was the company's interest expense?

a. $0
b. $2,000,000
c. $6,000,000
d. $15,000,000
e. $18,000,000

Answer 1

Russell Securities has $100 million in total assets and its corporate tax rate is 40 percent. The company recently reported that its basic earning power (BEP) ratio was 15 percent and its return on assets (ROA) was 9 percent. What was the company's interest expense? EBIT = $15,000,000.

Answer d.

If it’s not correct then I’m sorry