A firm is considering borrowing$1

million at an annual interest rate of6%. Assume that before considering this capital restructuring, the firm has total debt of$4 million at an annual interest rate of7% and annual depreciation expense of$400,000. Assuming EBIT of$600,000, what is thiscompany's cash coverage ratio(a) before; and(b) after the proposedrestructuring?

Choose the best answer below

A. 5.00; 14.29

B. 7.28; 14.29

C. 2.94; 3.57

D. 3.57; 2.94