Question
Lever Age pays a(n) 10% rate of interest on $9.6 million of outstanding debt with face value $9.6 million. The firms EBIT was $2.4 million.
| Lever Age pays a(n) 10% rate of interest on $9.6 million of outstanding debt with face value $9.6 million. The firms EBIT was $2.4 million. |
| a. | What is times interest earned? (Round your answer to 2 decimal places.) |
| b. | If depreciation is $160,000, what is cash coverage? (Round your answer to 2 decimal places.) |
| c. | If the firm must retire $260,000 of debt for the sinking fund each year, what is its fixed-payment cash-coverage ratio (the ratio of cash flow to interest plus other fixed debt payments)? (Round your answer to 2 decimal places.) |
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Financial Literacy For Managers
Authors: Richard A. Lambert
1st Edition
1613630182, 978-1613630181
