Harvard University BUSINESS CORE Module 7 Practice

Module 7 Practice 1) It is early 2005 and Metropolis has the financial reports for the past three years for Pathology Lab A, a potential acquisition target. Metropolis has also discussed the forecasts for the next three years with owners of Pathology Lab A but Metropolis has adjusted them based on their own assessment. Use the information below to calculate EBIT for each of the actual and forecast years. Then calculate EBIAT assuming a 30% tax rateTo calculate EBIT, simply add Net Income, Interest Expense, and Income Tax Expense for each year. For example, in cell B40, the correct answer formula would be =B17+B16+B15, which yields a result of $2,040. To calculate EBIAT, simply multiply EBIT by one minus the tax rate (1 - 0.3, which equals 0.7) for each year. For example in cell B42, the correct answer formula would be =B40*0.7, which yields a result of $1,428. EBIT 2,040 1,900 1,830 1,890 1,945 2,000 EBIAT 1,428 1,330 1,281 1,323 1,362 1,400 2) Metropolis sales related to pathology services were ₹367.5 million in 2005. Metropolis expects sales of pathology services to grow by 50% in 2006