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Last year AO Smith Corporation reported operating earnings of $ 6 0 million and interest expense of $ 8 million, giving it an interest coverage

Last year AO Smith Corporation reported operating earnings of $60 million and interest expense of $8 million, giving it an interest coverage ratio of 7.5($60-: $8). Forecasting next years results, you estimate the companys sales and operating earnings will increase by 15% and the company will need to borrow an additional $44 million of new debt at a cost of 6% to support the larger investment in assets needed to support the higher level of sales. What would be the expected interest coverage ratio based on these forecasted results? Present your result to one decimal place, e.g.,7.8.

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