What is the ratio after it borrows

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River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $280,000 of debt at an interest rate of 12% and use the proceeds to repurchase 28,000 shares at $10 per share. Profits before interest are expected to be $128,000.

What is the ratio after it borrows? (rounded to 2 decimal places)

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Reference no: EM13890377

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