Question

Hudson Company reports in its 2017 10-K, sales of $332 million, long-term debt of $27 million, and interest expense of $980,000. If sales are projected to increase by 4% next year, projected interest expense for 2018 will be:________
A) $1,019,200
B) $ 908,000
C) $1,007,000
D) $ 980,000

Answer 1

Answer:

D) $ 980,000

Explanation:

The computation of the  projected interest expense for 2018 will be is shown below:

Since sales are increased or decreased and the interest expense should remains constant or same

Also the interest expense based on the long term debt

Therefore the projected interest expense is $980,000

Hence, the correct option is d.