A firm incurs $60,000 in interest expenses each year. If the tax rate of the firm is 25%, what is the effective after-taxinterest rate expense for the firm?A. $33,750OB. $38,250C. $45,000D. $36,000

An interest expense is the cost incurred by an entity for borrowed funds. Interest part of your debt…

Answered: A firm incurs $60,000 in interest…

A firm incurs $60,000 in interest expenses each year. If the tax rate of the firm is 25%, what is the effe interest rate expense for the firm? OA. $33,750 OB. $38,250 OC. $45,000 OD. $36,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

A firm incurs $60,000 in interest expenses each year. If the tax rate of the firm is 25%, what is the effective after-tax
interest rate expense for the firm?
A. $33,750
OB. $38,250
C. $45,000
D. $36,000

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