OK you math guru's out there!

Discussion in 'Off-Topic Discussions' started by Mr. Engineer, Jul 11, 2004.

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  1. Mr. Engineer

    Mr. Engineer member

    I am in the middle of an assignment for my Accounting/Finance class and have to complete a income statement in reverse.

    If I desire a net income of $2.5M, and I know my tax rate is 40%, what would my EBT (earnings before taxes) be? I would assume that they would be $2.5M x 1.6, but this does not seem to work. What is the formula and what is the answer?

    Thanks!
     
  2. PETEUSA1

    PETEUSA1 New Member

    2,500,000/.60=41,66666.66 EBT

    Check: 4166666.66-40%=2500000
     
    Last edited by a moderator: Jul 11, 2004
  3. Bill Huffman

    Bill Huffman Well-Known Member

    x = gross income

    .6x = 2.5
    x = 2.5/.6 = 4.167
     
  4. SeptGrad

    SeptGrad New Member

    Mr. Engineer,
    Formula is EBT - .4EBT = net income, let EBT = x so x - .4x = 2.5mil
    This yields .6x = 2.5 mil. Solve for x to get 4.16 mil
     
  5. Mr. Engineer

    Mr. Engineer member

    I knew I should have paid attention in Algebra class! A million thanks to a well-versed group of people! Beleive it or not, I made it through Calculus, but that was in 1984. I guess I had better brush up a bit more before getting in deeper.

    Cheers a have a great evening.
     
  6. John Bear

    John Bear Senior Member

    . . . and before you get to a writing class, note that it would be "gurus" not "guru's."

    --J. Bear, VP for Nits, who saw a sign on the TV coverage
    of San Francisco's gay pride parade, that said
    JESUS DIED FOR YOUR SIN'S
     

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