Question #23
Reading: Reading 14 Financial Statement Modeling
PDF File: Reading 14 Financial Statement Modeling.pdf
Page: 13
Status: Unattempted
Question
Everystate Corporation reports Long-term debt of $3,398 and $3,658 respectively for the year ended Dec 31 2016 and 2015 respectively. Everystate reported an interest expense of $295 and $292 for the years ended 2016 and 2015 respectively. Everystate's interest rate on average gross debt is closest to:
Answer Choices:
A. 8.53%
B. 8.36%
C. 8.68%
Explanation
Average gross debt = (3,398 + 3,658)/2 = $3,528
Interest rate = 2016 interest / average debt = 295/3528 = 8.36%