Options
- A
Rs. 18,500
-
Rs. 25,000
Correct answer
- C
Rs. 31,000
- D
Rs. 36,500
Why this is the answer
Interest can be calculated step by step. First, equity is found using ROE: Equity = Net Profit ÷ ROE = 160,000 ÷ 0.16 = Rs. 1,000,000. Next, total capital employed is calculated using ROCE: Capital Employed = EBIT ÷ ROCE = 250,000 ÷ 0.2 = Rs. 1,250,000. The debt is the difference between capital employed and equity: Debt = 1,250,000 – 1,000,000 = Rs. 250,000. Finally, interest paid is 10% of debt: 0.10 × 250,000 = Rs. 25,000.
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