Culver Inc
Subject:BusinessPrice:2.87 Bought7
Culver Inc. has earnings after interest but before taxes of $300. The company's beforetax times-interest-earned ratio is 7.00. Calculate the company's interest charges.
a. $42.86
b. $50.00
c. $40.00
d. $60.00
e. $57.93
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ANSWER: B
TIE = EBIT/I
7 = ($300 + I)/I
7I = $300 + I
6I = $300
I = $50.
