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3: Interest Cover: The Borrowers Ltd currently pay 40,000 in interest on long term debt finance and have interest cover of 5. They want to
3: Interest Cover: The Borrowers Ltd currently pay 40,000 in interest on long term debt finance and have interest cover of 5. They want to borrow an additional 400,000 at 5%pa to finance a new product line in miniature furniture that is expected to add 100,000 per annum to Gross profits at a cost of 30,000 pa in additional fixed costs. What would be their new interest cover assuming all other results remain unchanged? a) 4 b) 4.5 c) 5 d) 6.75
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