Calculate fixed charge coverage ratio after incorporating

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Reference no: EM133433832

Question: In its most recent financial statements Driver Enterprises reported earnings before interest and taxes (EBIT) of $398 million and interest expense of $25 million. Included among its operating expenses reported on the income statement were lease expenses of $59 million. In a footnote Driver reported it had 8 years of future lease obligations averaging $40 million per year. The company faces a cost of debt of 7%. Calculate the fixed charge coverage ratio after incorporating the valuation of the lease obligations and the additional financing expenses associated with the leases.

Reference no: EM133433832

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