Delta Ltd has assets of $100 million, liabilities of $60 million and equity of $40 million at 30 June. The liabilities include preference shares with a carrying amount of $20 million. A dividend of $1 million (i.e., $1 000 000) was paid to preference shareholders on 30 June 20X1..

For the year ended 30 June 20X1:

Profit before tax and interest $5 000 000

Interest expense $1 500 000

Ignore tax.

If the preference shares are instead classified as equity, Delta Ltd's interest coverage, that is times interest earned (profit before tax and interest divided by interest), would be

Group of answer choices

2 times

12 times

3.3 times

10 times