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Respected Sir,
We’ve invested $3200 paying interest of 6%
”the funds invested would earn a before-tax return of 18% per year. ”
My ques is, The return= 0.18*3200=576
Has interest been already subtracted from the above return figure? or not…..
As before tax return more of seems like as if this rate gives you PROFIT BEFORE TAX…
If the interest hasnt been subtracted already from the return, then I would add it to Operating profit as done… but how do I know if the before tax return is also the before interest return?
Given that the investment earns 18% per year for both options 2 and 3, and is the same investment, then the 18% must be before interest.
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