Question: Collingwood Corp has a revolving line of credit on which
Collingwood Corp. has a revolving line of credit on which it owes $50 million. One of the restrictions imposed with this financing arrangement is that the company must maintain a minimum interest coverage ratio of 2. If this is the only borrowing, and the annual interest rate is 9.75 percent, how much does the company have to earn to live up to the covenant?
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