You are a commercial lender. Tom & Jerry$$s Manufacturing has come to you with a request for $$60$ million in total credit facilities, consisting of a $$20$ million asset$-$based line of credit and a $$40$ million term loan. The term loan will be used primarily to build a plant expansion, but also to pay a shareholder dividend. The plant expansion will cost $$30$ million and the shareholder dividend will be for $$10$ million.

The $$30$ million plant expansion will allow the company to grow its revenue and also increase its EBITDA margin. The CFO of Tom & Jerry$$s has submitted the following projected income statement, assuming that the company is able to build this plant expansion.

$1.$ Given the request for a term loan of $$40$ million and a line of credit of $$20$ million, can the company borrow that much? Please explain.

$2.$ Calculate the projected debt service coverage ratio $($DSCR$)$ on funded debt of $$40$ million, assuming a $10-$year loan amortization and a $10\%$ interest rate. Use a simple DSCR formula for calculations of DSCR $=$ EBITDA $/($Projected annual Principal $+$ Interest payments$).$

$3.$ If interest rates increase by $200$ basis points or $2\mathrm{.}0\%$ from $10\%$ to $12\%,$ how will the projected debt service coverage ratio $($DSCR$)$ change? How will the projected DSCR change if interest rates decrease by $200$ basis points or $2\mathrm{.}0\%$ from $10\%$ to $8\%?\backslash$table$[[,$Tom & Jerry's Manufacturing$],[,,$Year $0,,$Year $1,,$Year $2,,$Year $3,,$Year $4],[$Revenue$,$$$,100,000,000,$$$,110,000,000,$$$,120,000,000,$$$,135,000,000,$$$,150,000,000$