A firm is considering borrowing $1
million at an annual interest rate of 6%. Assume that before
considering this capital restructuring , the firm has total debt
of $4 million at an annual interest rate of 7% and annual
depreciation expense of $400,000. Assuming EBIT of $600,000, what
is this company's cash coverage ratio (a) before; and (b) after
the proposed restructuring?
A. 3.57; 2.94
B. 2.94; 3.57
C. 7.28; 14.29
D. 5.00; 14.29
A firm has been offered a...