A firm incurs $50,000 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?

Name: A firm incurs $50,000 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?
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Question

Quizplus · Accepted Answer

The effective after-tax interest expense is calculated by multiplying the interest expense by (1 - tax rate). So, $50,000 * (1 - 0.30) = $35,000.

A Firm Incurs $50,000 in Interest Expenses Each Year