Lever Age pays an 8% rate of interest on $10 million of outstanding debt with face value

Question:

Lever Age pays an 8% rate of interest on $10 million of outstanding debt with face value $10 million. The firm's EBIT was $1 million.

a. What is times interest earned?

b. If depreciation is $200,000, what is its cash coverage?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...