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Computing Interest Based on Other Amounts

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Johnson Corporation has announced that its net income for the year ended June 30, 2008, is $1,000,000. The company had an EBITDA of $ 4,900,000, and its depreciation and amortization expense was equal to $1,500,000. The company's tax rate is 34 percent. What is the amount of interest expense for the Corporation?

a. $1,590,749
b. $1,884, 849
c $880, 659
d. $1,489,500

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Solution Summary

This solution illustrates how to use a knowledge of the income statement components to derive the amount of interest expense incurred.

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Net income $1,000,000 (EBT*(1-.34))
EBT $1,515,152 ...

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