A company paid $11,310 in interest and $16,500 in dividends last year. The times interest earned ratio is 2.9, the depreciation expense is $7,900, and the tax rate is 21 percent. What is the value of the cash coverage ratio?

A company paid $11,310 in interest and $16,500 in dividends last year. The times interest earned ratio is 2.9, the depreciation expense is $7,900, and the tax rate is 21 percent. What is the value of the cash coverage ratio?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A company paid $11,310 in interest and $16,500 in dividends last year. The times interest earned ratio is
2.9, the depreciation expense is $7,900, and the tax rate is 21 percent. What is the value of the cash
coverage ratio?
O a.
3.71
O b. 3.60
O C.
2.78
d. 3.10
O e.
2.58

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