Limited makes car parts for major car brands in Germany. They have a net operating income...
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Limited makes car parts for major car brands in Germany. They have a net operating income of €1.5 million. They have issued bonds worth €2 million paying 10 percent every year. They plan to borrow an additional capi- tal of €3,000,000 from their bankers at 8 percent and invest in a new factory. The new factory is expected to generate an additional net operating income of €1.3 million. a. What is CJD Limited's interest cover ratio (times interest earned ratio) before the new loan? b. What effect will the new loan and investment have on its interest cover ratio (times interest earned ratio)? Limited makes car parts for major car brands in Germany. They have a net operating income of €1.5 million. They have issued bonds worth €2 million paying 10 percent every year. They plan to borrow an additional capi- tal of €3,000,000 from their bankers at 8 percent and invest in a new factory. The new factory is expected to generate an additional net operating income of €1.3 million. a. What is CJD Limited's interest cover ratio (times interest earned ratio) before the new loan? b. What effect will the new loan and investment have on its interest cover ratio (times interest earned ratio)?
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Answer 1 Interest Coverage Ratio EBIT Interest Before the new loan In... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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