Art's Boutique has sales of $640,000 and costs of $480,000. Interest expense is $40,000 and depreciation is $60,000. The tax rate is 34%. What is the net income?

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Net income is calculated by subtracting all expenses, including taxes, from total sales. Here's the breakdown:1. Sales: $640,0002. Costs: $480,0003. Interest Expense: $40,0004. Depreciation: $60,000First, calculate earnings before interest and taxes (EBIT):EBIT = Sales - Costs - Depreciation = $640,000 - $480,000 - $60,000 = $100,000Then, subtract interest expense to get taxable income:Taxable Income = EBIT - Interest Expense = $100,000 - $40,000 = $60,000Finally, calculate net income by subtracting taxes:Taxes = Taxable Income * Tax Rate = $60,000 * 34% = $20,400Net Income = Taxable Income - Taxes = $60,000 - $20,400 = $39,600

Art's Boutique Has Sales of $640,000 and Costs of $480,000