Question

In Applied Corporate Finance (3rd edition) textbook, the solution for the problem 4 Chapter 12 states: EBIT (1-t) = (50/0.4) + 100 interest, but it seems that if EBIT (1-t) = (NI/(1-t)) + Interest, then the correct way is EBIT (1-t) = (50/0.6) + 100 interest. In other words we use 40% tax rate not 60% tax rate. Could it be a typo in the solutions? Thank you,

Answer 1

i see you are trying to compute the nopat(net operative profit after taxes).
if ebit: 50 and maginal taxes are 40%, then you re nopat is 50 x(1-0,40)= 30

Answer 2

somebody has soft copy or notes of the book you ppl discussed about its not available here.kindly send it.