The Net Income of a Company for the Year Just

question 30

Multiple Choice

The net income of a company for the year just ended is $230,000. Income tax is $80,500 and interest expense is $20,000. The number of times interest was earned would be

• A) 0.05.
• B) 10.5.
• C) 11.5.
• D) 16.5.

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Definitions:

Risk-Free Rate

The return on an investment with no risk of financial loss, typically associated with government bonds.

Expected Inflation

The anticipated rate at which prices of goods and services will rise over a period.

Spot Rate

The prevailing market rate at which a specific asset is available for purchase or sale with immediate effect.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true return on lending.