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Home Q & A Board Other Fields Homework Help Business Finance
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sharonfaith30 sharonfaith30
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A year ago
A new firm is developing its business plan. It will require $680,000 of assets, and it projects $551,300 of sales and $402,100 of operating costs for the first year. Management is quite sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 8.1%, but the bank requires it to have a TIE ratio of at least 4.6, and if the TIE ratio falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt ratio the firm can use? (Hint: Find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.)


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56.31%



▸

57.60%



▸

58.89%



▸

59.02%

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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owenutonowenuton
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sharonfaith30 Author
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A year ago
this is exactly what I needed
hannahspillett
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Yesterday
Smart ... Thanks!
Tabitha.davis
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2 hours ago
Thank you, thank you, thank you!
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