A Firm Incurs $40,000 in Interest Expenses Each Year

question 72

Multiple Choice

A firm incurs $40,000 in interest expenses each year. If the tax rate of the firm is 30%, what is the effective after-tax interest rate expense for the firm?

• A) $21,000.00
• B) $22,400.00
• C) $23,800.00
• D) $28,000.00

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Definitions:

Fertilizer

Materials, either natural or synthetic, applied to soils or directly to plants, to supply nutrients essential for growth.

Bushels

A unit of volume that is used primarily in the United States for quantifying the volume of agricultural commodities like grains.

Profit

The income earned when the total revenue from business activities is higher than the combined expenses, costs, and taxes necessary for those activities.

Proportions

The relationship between parts and a whole in terms of size, quantity, or degree.