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Question(s) / Instruction(s):

Rao Construction recently reported $20.50 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 40%.  What was Raos operating income, or EBIT, in millions?

a)            $3.21

b)            $3.57

c)            $3.97

d)            $4.41

e)            $4.90

 

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