Question $6$

Question $7$

Question $8$

Question $9$

Question $10$

Question $11$

Question $12$

Question $13$

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Part $1$

$($Analyzing capital$$ structure$)$ The Karson Transport Company currently has net operating income of $$$$502$ comma $000$ and pays interest expense of $$$$200$ comma $000.$ The company plans to borrow $$$$1\mathrm{.}02$ million on which the firm will pay $12$ percent interest. The borrowed money will be used to finance an investment that is expected to increase the$$ firm's net operating income by $ $403$ comma $000$ a year.

a$.$ What is Karson$\text{'}$s times interest earned ratio before the loan is taken out and the investment is$$ made?

b$.$ What effect will the loan and the investment have on the$$ firm's times interest earned$$ ratio?

c$.$ If the$$ firm's estimates of the effect of the new investment work out as$$ planned, do the changes have a positive effect on the$$ firm's financial$$ condition?

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Part $1$

a$.$ What is Karson$\text{'}$s times interest earned ratio before the loan is taken out and the investment is$$ made?

The times interest earned ratio is

$$

$2\mathrm{.}51$ times. $($Round to two decimal$$ places.$)$

Part $2$

b$.$ What effect will the loan and the investment have on the$$ firm's times interest earned$$ ratio?

The new times interest earned ratio is

$$

enter your response here times.$($Rou