$(3-10)$

Times$-$Interest$-$Earned Ratio

The Manor Corporation has $$500,000$ of debf oulstanding, and if pays an interest rate of $10\%$ annually: Manor's annual sales are $$2$ million, its average tax rate is $30\%,$ and its net profit margin on sales is $5\%.$ If the company does not maintain a TIE ratio of a least $5$ to $1,$ then its bank will refuse to renew the loan and bankruptcy will result. What is Manor's TIE ratio?