Question
An assited living center administrator has determined that a renovation of the rehabilitation center will increase the profitability of the organization. Although interes expense will
An assited living center administrator has determined that a renovation of the rehabilitation center will increase the profitability of the organization. Although interes expense will increas e 80% from $200000 the annual net income after renovation is projected to be one million dollars from the previous years $400000 profit. The times interes earned ratio industy standard is 3.25. How has the financial analysis impacted the renovation decision? 1) for every dollar in profit earned the organization will pay $0.36 cents in interest. 2) for every dollar in interest expense the organization will earn $2.50 in profit. 3) For every dollar in profit earned the organization will pay $0.20 cents in interest. 4) For every dollar in interest expense the organization will earn $3.78 in profit.
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