1. Hutchinson Corporation has zero debt - it is financed only with common equity. Its total assets are $405,000. The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

a. $161,973.40

b. $162,000.00

c. $161,986.70

d. $162,013.30

e. $162,026.60

2. Orono Corp.'s sales last year were $565,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio?

a. 16.20

b. 18.90

c. 18.00

d. 17.10

e. 19.80

3. Bostian, Inc. has total assets of $670,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO to move towards a debt-to-assets ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?

a. $183,500

b. $183,556

c. $183,444

d. $183,389

e. $183,611

4. Ziebart Corp.'s EBITDA last year was $435,000 ( = EBIT + depreciation + amortization), its interest charges were $9,500, it had to repay $26,000 of long-term debt, and it had to make a payment of $17,400 under a long-term lease. The firm had no amortization charges. What was the EBITDA coverage ratio?

a. 8.91

b. 7.83

c. 8.55

d. 8.19

e. 7.47