A new firm is developing its business plan. It will require $735,000 of assets (which equals total invested capital), and it projects $450,000 of sales and $355,000 of operating costs for the first year. Management is reasonably sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. The firm will use only debt and common equity for financing. What is the maximum debt to capital ratio (measured as debt total invested capital) the firm can use? (Hint: Find the maximum dollars of interest, then the debt that produces that interest, and then the related debt to capital ratio.) Do not round your intermediate calculations. Select one: c a. 46.53% 0 b. 34.90% c. 38.78% d. 43.08% e. 53.85% Companies HD and LD have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. Both firms finance using only debt and common total capital ratio and therefore a higher interest expense. Which of the following statements is CORRECT? Select one: a. Company HD has more net income. b. Company HD has a lower times-interest-earned (TIE) ratio. c. Company HD pays more in taxes. d. Company HD has a lower equity multiplier. e. Company HD has a lower ROE