Question
The management of National Utility Company has applied for a $550,000 commercial loan to purchase additional leased vehicles for its expanding business. The commercial loan
The management of National Utility Company has applied for a $550,000 commercial loan to purchase additional leased vehicles for its expanding business. The commercial loan office has requested and received the following itemized financial information to perform the due diligence:
The company generates Earnings Before Interest, Taxes, Depreciation & Amortization of $750,700
The company pays $85,000 in taxes for the current year
The company pays annual interest expense of $95,000 on its loans
The company spends $10,000 annually to replace some of its Property, Plants, and Equipment's
The company pays annual lease principal payments of $110,000
The company pays monthly lease payments of $3,000 for its fleet of vehicle
a. Please calculate the Fixed-Charged Coverage (show your work for full points) (35%)
b. Should the loan officer approve the loan request?
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Given Monthly Expense Lease payments 3000 Annual Expenses Annual EBITDA 750700 Annual interes...
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
