As the Financial vice president for Bear Enterprises, you have the following information:
Expected net income after tax next year before new financing : $60,000,000
Sinking Fund payments due next year on existing debt: $20,000,000
Interest due next year on existing debt $18,000,000
Conpany Tax rate 25%
Common Stock Price, per share $17
Common Shares outstanding: 22,000,000
Calculate Bear's times-interest earned ratio for next year assuming the firm raises $60 Million of new debt at an interest rate of 9 percent.
a. 3.29
b. 3.59
c. 2.25
d. 4.19