Rao Construction recently reported $30.00 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 25%. What was Rao's operating income, or EBIT, in millions.
Since sales = $30.00 million
Operating costs excluding depreciation = $12.6 million
Depreciation = $3.0 million
Therefore; Operating income (EBIT) = Net earnings - Operating costs - Depreciation
= $30.00 - $12.6 - $3.0
= $14.4 million.
a. money supply
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