Laura Bella Company reports the following statement of income:

Operating Revenues $6,800

Costs and Expenses:

Cost of Sales (2,500)

Selling, Service, Administrative, and General Expense (1,800)

Income Before Interest Expense and Income Taxes $2,500

Interest Expense (780)

Income Before Income Taxes $1,720

Income Taxes (850)

Net Income $ 870

Note: Depreciation expense totals $800; preferred dividends total $80; operating lease payments total $540. Assume that 1/3 of operating lease payments is imputed for interest.

Required: Compute the fixed-charge coverage.

a. 6.7 times

b. 7.0 times

c. 2.8 times

d. 6.1 times

e. None of the answers is correct.