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Lever Age pays a(n) 9% rate of interest on $11.0 million of outstanding debt with face...

Lever Age pays a(n) 9% rate of interest on $11.0 million of outstanding debt with face value $11.0 million. The firm’s EBIT was $2.0 million.
a.

What is times interest earned? (Round your answer to 2 decimal places.)
  Times interest earned   
b.

If depreciation is $300,000, what is cash coverage? (Round your answer to 2 decimal places.)
  Cash coverage   
c.

If the firm must retire $400,000 of debt for the sinking fund each year, what is its “fixed-payment cash-coverage ratio” (the ratio of cash flow to interest plus other fixed debt payments)? (Round your answer to 2 decimal places.)
  Fixed-payment cash-coverage ratio   
Business   Accounting   
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Answer #1
a. Interest = Interest % * Face value of debt = 9% * 11000000 990000
Times interest earned = EBIT / Interest = 2000000 / 990000 2.02
b. Cash coverage = ( EBIT + Non cash expense ) / Interest expense = ( 2000000 + 300000 ) / 990000 2.32
c. Fixed payment cash coverage ratio = ( EBIT + Non cash expense + Fixed debt payment ) / ( Interest expense + Fixed debt payment ) = ( 2000000 + 300000 + 400000 ) / ( 990000 + 400000 ) 1.94
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