You have been provided with the following information for Jeep Inc

Accounting Dec 01, 2020

You have been provided with the following information for Jeep Inc.: 00 R 50 000 Interest income 2 030 000 Income from operations 1 400 000 Net profit (after tax) The firm's tax rate is 30%. Calculate the interest expense.

Expert Solution

Net profit before tax

= 1,400,000*100/70

= 2,000,000

Net profit before tax = Income from operation + interest income - interest expense

2,000,000 = 2,030,000 + 50,000 - interest expense

Interest expense = 80,000

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