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Times-Interest-Earned Ratio
The Morris Corporation has $550,000 of debt outstanding, and it pays an interest rate of 9% annually. Morris's annual sales are $2.75 million, its average tax rate is 40%, and its net profit margin on sales is 8%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Round intermediate calculations to two decimal places. Round your answer to two decimal places.
The most popular way for international expansion is for a local firm to acquire foreign companies. Explain why an MNC may invest funds in a financial market outside its own country
Your firm is contemplating the purchase of a new $575,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $59,000 at the end of that time. At what level of pretax cost ..
What is the duration of a bond with four years to maturity and a coupon of 9.6 percent paid annually if the bond sells at par?
You purchased 200 shares of preferred stock on January 1, 2002 for $42.27 per share. The stock pays an annual dividend of $5 per share. On December 31, 2002 the market price is $43.88 per share. What is your percentage return on investment for the ye..
What is the difference between the income statement and balance sheet in regards to timing? What is wrong with this statement: "The clinic's cash balance for 2011 was $150,000, while its net income on December 31, 2011 was $50,000."
In early 1990, Boeing Co. decided to gamble $4 billion to build a new long-distance, 350-seat wide-body airplane called the Boeing 777. The price tag for the 777, scheduled for delivery beginning in 1995, is about $120 million apiece. what is the bre..
Nance’s Restaurant, a local independent restaurant, is evaluating new point-of-sale (POS) systems and must determine if a new installation is feasible. A new POS installation would include both software and hardware, with a total cost of $20,000. Det..
Assume that your required rate of return is 12 percent and you are given the following stream of cash flows: If payments are made at the end of each period, what is the present value of the cash flow stream?
ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?
Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production. You will need an initial $1,440,000 investment in threading equipment to get the project started; the project will last for 7 years. The estim..
You would like to establish a trust fund that would pay annual payments to your heirs of $104 thousand a year forever. You expect the trust fund to earn an average return of 7.57 percent. How much do you need to deposit into this trust fund today to ..
(Compound value solving for n?) How many years will the following? take? a.?$ 520 to grow to ?$ 1,330.18 if invested at 11 percent compounded annually b.?$ 37 to grow to ?$ 73.72 if invested at 9 percent compounded annually c.?$ 115 to grow to ?$ 501..
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