Parrino Company has announced that its profit for the year ended June 30, 2013, is $1,824,214. The company had an EBITDA of $ 5,174,366, and its depreciation and ?mortization expense was equal to $1,241,790. The company's tax rate is 30 percent. What is the amount of interest expense for the company?

Question

Quizplus · Accepted Answer

We can use the formula for calculating interest expense as follows:

Interest Expense = EBITDA - Depreciation and Amortization Expense - Profit Before Tax
Profit Before Tax = Profit - Interest Expense

Substituting the given values, we get:

Profit Before Tax = $1,824,214 / (1 - 0.30) = $2,606,020
Interest Expense = $5,174,366 - $1,241,790 - $2,606,020 = $1,326,556

Therefore, the amount of interest expense for the company is $1,326,556, which is option D.

Parrino Company Has Announced That Its Profit for the Year