Compute the After-Tax Interest Expense for a Firm with Interest

question 70

Multiple Choice

Compute the after-tax interest expense for a firm with Interest on Excess Cash = $2,000, Interest on Debt = $7,000, and a tax rate of 30%.

• A) $2,500
• B) $2,800
• C) $3,100
• D) $3,500

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Definitions:

Base Amount

The initial sum of money used as a reference point or starting figure for calculations, adjustments, or comparisons.

Net Sales

The amount of revenue generated from goods or services sold after deducting returns, allowances for damaged or missing goods, and discounts.

Days In Inventory

A financial ratio that indicates the average number of days a company holds inventory before selling it.

Inventory Turnover

A financial metric that measures the number of times a company sells and replaces its stock of goods during a particular period.