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A company has a loan of Rs 20,0000
as part of its capital employed
The Interest payable on loan is 15%
and the ROI of the company is 25% the re of income tax is 40% what is the gain to the shareholders due to the loan raised by the company
Answers
Answered by
1
Answer:
The share holders get the benefit of interest amount rs 30000 as savings in tax.
Answered by
0
Answer:
ROI = EBIT/ Capital Employed
EBIT = ROI × Capital Employed
= 25% × 20,00,000
= 5,00,000
Intrest = 20,00,000 × 15%
= 3,00,000
Shareholders Gain = EAT ( Earning After Tax)
EAT = (EBIT - Intrest) - Income Tax
= (5,00,000 - 3,00,000) - 40%
= 2,00,000 - 40%
= 2,00,000 - 80,000
= 1,20,000
Hence, the gain the shareholders due to the loan raised by the company is RS. 1,20,000.
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