Profit after tax and interest is Rs 1,60,000.

Tax rate is 20%

10% long term borrowing is Rs 20,00,000

Find profit before tax and after interest

Given:

• Profit after tax and interest = Rs 1,60,000
• Tax rate = 20%

Let Profit before tax and after interest = $P$

The relationship between profit before tax and profit after tax is:

Profit after tax = Profit before tax × (1 - Tax rate)

Substituting the values:

1,60,000 = $P$ × (1 - 0.20)

1,60,000 = $P$ × 0.80

$P$ = 1,60,000 ÷ 0.80

$P$ = 2,00,000

Verification:

Profit before tax and after interest = Rs 2,00,000

Less: Tax @ 20% = Rs 40,000

Profit after tax and interest = Rs 1,60,000 ✓

Note: The information about long-term borrowing is not required here since we are finding profit before tax but after interest, and the given profit of Rs 1,60,000 is already after interest deduction.

Correct Option: 3 (Rs 2,00,000)