What is its times-interest-earned ratio

Assignment Help Financial Management
Reference no: EM131997726

1. All Rite Co. has arranged a line of credit of $225,000 with an interest rate of 8.25 percent and a compensating balance requirement of 1.5 percent, which is based on the total amount borrowed. Assume the firm uses this source of funding to purchase a $167,000 piece of equipment and repays the loan in a lump sum at the end of one year. What is the effective interest rate?

2. Graser Trucking has $10 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 12%, and its return on assets (ROA) is 6%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

Reference no: EM131997726

Questions Cloud

Millionaire status with this type of investment account : Alyssa’s goal is to become a millionaire. How many years will it take to acquire that millionaire status with this type of investment account?
To create bond portfolio with overall duration : To create a bond portfolio with an overall duration of 15 years, the insurance company decides to buy zero coupon bonds with a maturity of 20 years.
Balance of current liabilities on the firm balance sheet : What is the balance of current assets on the firm's balance sheet? What is the balance of current liabilities on the firm's balance sheet?
Evaluate three companies that offer DIPs or DRIPs : Evaluate three companies (look for investor information) that offer DIPs or DRIPs.
What is its times-interest-earned ratio : Its basic earning power (BEP) ratio is 12%, and its return on assets (ROA) is 6%. What is its times-interest-earned (TIE) ratio?
What was the firm end-of-year cash balance : You have just been hired as a financial analyst for Basel Industries. What was the firm's end-of-year cash balance?
How long will alden have to wait before funds are double : Alden’s dad follows through and expects an annual return of 10% on the prize funds. How long will Alden have to wait before the funds are double?
Dividends were paid to shareholders during the year : The previous retained earnings were $741 million. How much in dividends were paid to shareholders during the year?
What is the value of common stock : The appropriate discount rate is 10%. What is the value of the common stock under this scenario?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firm total debt to total capital ratio

Info Technics Inc. has total assets equal to $1,000,000. The firm’s total equity equals $500,000. What is the firm’s total debt to total capital ratio?

  Impact of event to equilibrium price and quantity of event

The following events occur in the market for good B, which is a normal good: Identify the impact of the event to the equilibrium price and quantity of each event.

  How should inline account for warranty claims

Inline Incorporated manufactures skates and equipment for in-line skating. The company offers a one-year warranty on all products. During 2012, the company recorded net sales of $3,887.4 million. How should Inline account for warranty claims? Calcula..

  Dividends to be qualified under current tax laws

A fund has $829 million dollars of assets, $27 million of liabilities, and 13 million shares outstanding. During the year the fund made qualified dividend distributions of $2.8 per share, long term capital gains distributions of $1.9, and short-term ..

  What year was crude oil was more expensive

From the Federal Reserve Bank of St Louis you collect the following data: In real terms, in what year was crude oil was more expensive? Show your calculations and provide a brief explanation.

  System of two linear equations in two variables

Formulate the situation as a system of two linear equations in two variables.

  What is their yield to maturity and yield to call

Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1000 and an 8% coupon rate, payable semiannually. The price of the bonds is $1100. The bonds are callable in 5 years at a call price of $1050. What is their yield t..

  What is the breakeven salvage value

A manufacturer of aerospace products acquired a new multispindle, multi-turret turning center for $250,000. The machine will generate new revenue of $80,000 per year. Now, suppose that the project duration is 5 years and that an estimate of the value..

  What is the risk-neutral price of the insurance contract

Fund manager John Smith hopes to buy a corporate bond to maximize his portfolio’s return. The one-year zero-coupon bond that John is considering has a default probability of 30%. What is the risk-neutral price of the insurance contract?

  What is the stock price for each company

The growth rate in dividends for all three companies is 4 percent. What is the stock price for each company?

  Commissions at time when the margin requirement

Three hundred shares of stock are purchased on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50 percent. How much additional cash would you need to deposit with your broker if the price..

  What rate of return does investor expect to receive

Digging Deep Company's common stock is currently selling for $144.87 per share. What rate of return does the investor expect to receive on this stock

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd