Aaron's Tea House has a 32 percent tax rate and an interest tax shield valued at $6,728 for the year. How much did the firm pay in annual interest?

Name: Aaron's Tea House has a 32 percent tax rate and an interest tax shield valued at $6,728 for the year. How much did the firm pay in annual interest?
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Question

Quizplus · Accepted Answer

The interest tax shield is calculated as the interest expense multiplied by the tax rate. Given the interest tax shield is $6,728 and the tax rate is 32%, the interest paid is $6,728 / 0.32 = $21,025.

Aaron's Tea House Has a 32 Percent Tax Rate and an Interest