Sand Mountain Resort has a tax rate of 32 percent.Its total interest payment for the year just ended was $41,000.What is the interest tax shield for the year?

Question

Quizplus · Accepted Answer

The interest tax shield is calculated as the product of the tax rate and the amount of interest paid.

Interest tax shield = Tax rate x Interest payment 
= 0.32 x $41,000 
= $13,120

Therefore, the best choice is B) $13,120, as it is the correct calculation of the interest tax shield for Sand Mountain Resort.

Sand Mountain Resort Has a Tax Rate of 32 Percent