Compute the after-tax interest expense for a firm with Interest on Excess Cash = $5000,Interest on Debt = $8000,and a tax rate of 30%.
A)$2100
B)$2200
C)$2500
D)$2700
E)$3100

Name: Compute the after-tax interest expense for a firm with Interest on Excess Cash = $5000,Interest on Debt = $8000,and a tax rate of 30%. A)$2100 B)$2200 C)$2500 D)$2700 E)$3100
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Quizplus · Accepted Answer

After-tax interest expense = (Interest on Debt + Interest on Excess Cash) * (1 - Tax rate)= ($8000 + $5000) * (1 - 0.30)= $13000 * 0.70= $9100

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