Duval company recently reported the following information: Earning before tax (EBIT) is $1,000,000, assets are $10,000,000 and tax rate is 40%, what is its basic earning power (BEP)? Select one: O a

Finance Aug 13, 2020

Duval company recently reported the following information: Earning before tax (EBIT) is $1,000,000, assets are $10,000,000 and tax rate is 40%, what is its basic earning power (BEP)? Select one: O a. 17.25% O b. 10% O c. 8.25% O d. 12.25%

Expert Solution

Basic earnings power ratio=EBIT/Total assets=1,000,000/10,000,000=10%

Option b is correct

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