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Find the fixed charge coverage of the preferred stock

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Question: The Bullorbear Company has 500,000 shares of $2 preferred stock outstanding. It generates an EBIT of $40 million and has annual interest payments of $2 million. Given this information, determine the fixed charge coverage of the preferred stock-assume the dividends qualify for the preferential tax rate. Given that the firm also has $5.5 million in depreciation and amortization, use EBITDA to find the fixed charge coverage of this preferred stock.

Reference no: EM131627434

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