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(Solved): (Capital structure analysis). The Karson Transpont Company currently has net operating incorme of $ ...
(Capital structure analysis). The Karson Transpont Company currently has net operating incorme of $500,000 and pays interest expense of 5203,000 The company plans to borro 51.15 million on which the fimm will pay 10 percent interest. The bocrowed money will be used to finance an investment that is expected io increase the firm's net operating income bi 5401,000 a year a. What is Karson's times interest earned ratio before the loan is taken out and the investmont is made? b. What effect wia the loan and the investment have on the forr's times interost earned rabio? a. What is Karson's times interent earned ratio before the loan is taken out and the inwestment is made? The times interest eamed rato is times. (Round to fwo decimal places))
To calculate Karson Transport Company's times interest earned ratio before the loan is taken out and the investment is made, we can use the following formula: