Refer to the Following Selected Financial Information from Graphics, Inc

question 139

Multiple Choice

Refer to the following selected financial information from Graphics, Inc. Compute the company's times interest earned. $$\begin{array} { | l | r | } \hline\\\hline \text { Interest expense } & \$ 9,100 \\\hline \text { Income tax expense } & 22,700 \\\hline \text { Net income after tax } & 56,500 \\\hline\end{array}$$

• A)9.7.
• B)8.7.
• C)3.7.
• D)2.5.
• E)6.2.

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Definitions:

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest from previous periods on a monthly basis.

RRSP

Registered Retirement Savings Plan, a savings account, registered with the Canadian government, that defers income taxes on retirement savings until withdrawal.

Accumulate

The act of gathering or collecting over a period of time, often resulting in an increase in quantity.

Ordinary Annuity

An annuity where the payments are made at the end of each period for a fixed length of time.