Asked Feb 4, 2020

A firm incurs $70,000 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?


Expert Answer

Step 1

The below expression can be used to calculate after-tax interest expense:

Finance homework question answer, step 1, image 1

Step 2

After-tax interest expense is calculated below:

Finance homework question answer, step 2, image 1


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