Question
5) Times-Interest-Earned Ratio The Morrit Corporation has $1,140,000 of debt outstanding, and it pays an interest rate of 9% annually. Morrit's annual sales are $6
5) Times-Interest-Earned Ratio
The Morrit Corporation has $1,140,000 of debt outstanding, and it pays an interest rate of 9% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round answer to two decimal places.
What is the future value of a 12%, 5-year ordinary annuity that pays $650 each year? Do not round intermediate calculations. Round answer to the nearest cent. $_______
If this were an annuity due, what would its future value be? Do not round intermediate calculations. Round answer to the nearest cent. $________
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Present and Future Values of Single Cash Flows for Different Interest Rates
Use both the TVM equations and a financial calculator to find the following values. Do not round intermediate calculations. Round answers to the nearest cent.
1.An initial $400 compounded for 10 years at 6%. = $_______
2.An initial $400 compounded for 10 years at 12%. = $_______
3.The present value of $400 due in 10 years at a 6% discount rate. = $ _________
4.The present value of $400 due in 10 years at a 12% discount rate. $_______
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