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FINC 600 - The Garner Transport Company currently has net operating income of $500,000

Question # 00622091
Subject: Finance
Due on: 11/25/2017
Posted On: 11/25/2017 01:00 PM

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2. (Capital structure analysis) The Garner Transport Company currently has net operating income of $500,000 and pays interest expense of $200,000. The company plans to borrow $1 million on which the firm will pay 10 percent interest. The borrowed money will be used to finance an investment that is expected to increase the firm's net operating income by $400,000 a year.

  • What is Garner's times interest earned ratio before the loan is taken out and the investment is made?
  • What effect will the loan and the investment have on the firm's times interest earned ratio?

Tags operating income 0 currently company garner transport finc investment operating income firms earned times company loan ratio expected effect used increase finance 0 money garners year taken percent currently 1 transport garner structure analysis pays expense firm capital

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FINC 600 - The Garner Transport Company currently has net operating income of $500,000

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