What is your debt capacity

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Reference no: EM132040347

You have recently acquired a family business that has no debt. You are interested in borrowing funds for investments to improve the productivity of the business. You want to be able to satisfy the banks and to keep an investment grade rating. You learn that to be able to borrow at 6.5%, your operating cash flow coverage must be at least three times debt service. You forecast operating cash flow at $25 million. What is your debt capacity (assume you will rollover the debt, so that no consideration of principal repayments is required)?

Reference no: EM132040347

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