A Company Paid Total Interest on Its Debt Last Year

question 57

Multiple Choice

A company paid total interest on its debt last year of $400,000 and also paid out $250,000 in dividends.If their tax rate is 40%, what was the after-tax cost to the company of each of those sources of financing? $\begin{array}{lll}&\text { Interest } & \text { Dividends }\\a) &\$ 400,000 & \$ 250,000 \\b) &\$ 400,000 & \$ 150,000 \\c) &\$ 240,000 & \$ 250,000 \\d) &\$ 240,000 & \$ 150,000\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Upper Frequencies

The higher range of frequencies or pitches, often associated with sounds or signals.

Lower Frequencies

Refers to the part of the spectrum that includes waves with relatively long wavelengths and, correspondingly, lower energy levels.

Sudden

Occurring or done quickly and unexpectedly or without warning.

MIDUS Study

A national longitudinal study of health and well-being in the United States, exploring factors that influence health across the lifespan.