fin320 (Capital structure​ analysis)The Karson Transport Company currently has net operating income of $494,000 and pays interest expense of $194,000. The company plans to borrow $1.05 million on which the firm will pay 12 percent interest. The borrowed money will be used to finance an ivestment that is expected to increase the​ firm's net operating income by $397,000 a year. What is​ Karson's times interest earned ratio before the loan is taken out and the investment is​ made? The times interest earned ratio is ___times. ​ (Round to two decimal​ places.) What effect will the loan and the investment have on the​ firm's times interest earned​ ratio? The new times interest earned ratio ___times. ​(Round to two decimal​ places.)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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fin320

(Capital structure​ analysis)The Karson Transport Company currently has net operating income of $494,000 and pays interest expense of $194,000. The company plans to borrow $1.05 million on which the firm will pay 12 percent interest. The borrowed money will be used to finance an ivestment that is expected to increase the​ firm's net operating income by $397,000

a year.

  1. What is​ Karson's times interest earned ratio before the loan is taken out and the investment is​ made?

The times interest earned ratio is ___times. ​ (Round to two decimal​ places.)

  1. What effect will the loan and the investment have on the​ firm's times interest earned​ ratio?

The new times interest earned ratio ___times. ​(Round to two decimal​ places.)

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