If a Company Had Net Income of $1,486,875 a Times

question 194

Multiple Choice

If a company had net income of $1,486,875 a times interest earned ratio of 4.0,a tax rate of 35%,and operating income of 3,050,000,what would the company's interest expense be for the year?

• A)$1,067,500
• B)$725,329
• C)$371,719
• D)$762,500
• E)$1,564,000

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Definitions:

Leased

A contractual arrangement where an owner of an asset allows another party to use that asset in return for payment over a specified period.

CCA Class

A classification system used in Canadian tax law for the depreciation of property, plant, and equipment for tax purposes.

Pre-Tax Cost

The expense of an investment or project before accounting for taxes; it reflects the gross cost.

Net Advantage

An evaluation metric that identifies the benefits minus the costs of pursuing a specific action or investment.