Frederickson Office Supplies recently reported $10,000 of sales, $7,250 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's taxable income, or earnings before taxes (EBT)?

Select the correct answer.

a. $900

b. $1,700

c. $1,100

d. $1,300

e. $1,500