6.7 As the chief financial officer of Cascade Designs, you have the following information:

Next years expected net income after tax but before new financing	$70 million
Sinking-fund payments due next year on the existing debt	$20 million
Interest due next year on the existing debt	$15 million
Common stock price, per share	$40.00
Common shares outstanding	$25 million
Company tax rate	30%

a. Calculate Cascades times-interest-earned ratio for next year assuming the firm raises $70 million of new debt at an interest rate of 6 percent.

b. Calculate Cascades times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $7 million.

c. Calculate next years earnings per share assuming Cascade raises the $70 million of new debt.

d. Calculate next years times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Cascade sells 2 million new shares at $35 a share instead of raising new debt