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Question
Wilson Manufacturing Company is considering the issuance of additional long-term debt to finance expansion. At the present time the company has $160 million of 10% debentures outstanding. Its after-tax net income is $48 million, and the company's (marginal) income tax rate is 40%. The company is required by the debenture holders to maintain its coverage ratio at 4.0 or greater. Determine Wilson's present coverage ratio.a. 3.33
b. 2.78
c. 5.00
d. 6.00
Answer
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Related questions
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Q:
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Q:
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b. the value of the firm is independent of its capital structure in perfect capital markets with no income taxes
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Q:
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Q:
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d. $3.33