EA Two-Part Analysis 2

Question 1

A company's net income is $1.2M. The tax rate is 25% and interest expense is $200K. What is operating income (EBIT) AND earnings before tax (EBT)?

Accepted Answer

EBIT=$1.8M, EBT=$1.6M

Answer

EBT = net income / (1−tax) = $1.2M / 0.75 = $1.6M; EBIT = EBT + interest = $1.6M + $0.2M = $1.8M.

Question 2

Two investments: Investment A returns 8% annually on $50K. Investment B returns 6% on $80K. What is the annual return for A AND the combined annual return for both?

Accepted Answer

A=$4K, Combined=$8.8K

Answer

A return = $50K × 0.08 = $4K; B return = $80K × 0.06 = $4.8K; combined = $8.8K.

Question 3

A worker completes 2/3 of a task. A second worker completes 1/4 of what remains. What fraction did the second worker complete AND what fraction of the original task remains?

Accepted Answer

Second=1/12, Remaining=1/4

Answer

Remaining after worker 1 = 1/3; worker 2 does 1/4 × 1/3 = 1/12; remaining = 1/3 − 1/12 = 3/12 = 1/4.

Question 4

A car depreciates 20% in Year 1 and 15% in Year 2. It was purchased for $30,000. What is the value after Year 1 AND after Year 2?

Accepted Answer

After Y1=$24K, After Y2=$20.4K

Answer

After Y1 = $30K × 0.80 = $24K; after Y2 = $24K × 0.85 = $20.4K.

Question 5

A store has 200 items. 30% are on sale at 50% off the original $40 price. What is the sale price per item AND total revenue if all items sell?

Accepted Answer

Sale price=$20, Total=$9,600

Answer

Sale price = $40 × 0.5 = $20; 60 items at $20 + 140 items at $40 = $1,200 + $5,600 = $6,800... recalculate: 60×$20=$1,200; 140×$40=$5,600; total=$6,800. The answer $9,600 requires re-checking — 200×0.30=60 sale items; 140 full price: 140×40+60×20=5,600+1,200=6,800.

EA - Executive Assesment Practice Test

EA - Executive Assesment Practice Test

EA Two-Part Analysis 2