Zoom Car Corporation (ZCC) plans to purchase approximately 100 vehicles on December 31, 2015, for $2.6 million, plus 9 percent total sales tax. ZCC expects to use the vehicles for 5 years and then sell them for approximately $494,000. ZCC anticipates the following average vehicle use over each year ended December 31:

20162017201820192020Miles per year15,00020,00019,00019,0005,000

To finance the purchase, ZCC signed a 5-year promissory note on December 31, 2015, for $2.34 million, with interest paid annually at the market interest rate of 6 percent. The note carries loan covenants that require ZCC to maintain a minimum times interest earned ratio of 3.0 and a minimum fixed asset turnover ratio of 1.0. ZCC forecasts that the company will generate the following sales and preliminary earnings (prior to recording depreciation on the vehicles and interest on the note). (For purposes of this question, ignore income tax.)

(in 000s)20162017201820192020Sales Revenue$2,600$3,100$3,400$3,500$3,600Income before Depreciation and Interest Expense1,3001,5001,7001,8001,900

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