Question
Lever Age pays a(n) 9% rate of interest on $10.1 million of outstanding debt with face value $10.1 million. The firms EBIT was $1.1 million.
| Lever Age pays a(n) 9% rate of interest on $10.1 million of outstanding debt with face value $10.1 million. The firms EBIT was $1.1 million. |
| a. | What is times interest earned? (Round your answer to 2 decimal places.) |
| Times interest earned |
| b. | If depreciation is $210,000, what is cash coverage? (Round your answer to 2 decimal places.) |
| Cash coverage |
| c. | If the firm must retire $310,000 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.) |
| Fixed-payment cash-coverage ratio |
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Principles Of Managerial Finance
Authors: Chad J. Zutter, Scott Smart
16th Edition
0136945880, 978-0136945888
