The Karson Transport Company currently has net operating income of $491,000 and pays interest expense of $198,000. The c

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answerhappygod
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The Karson Transport Company currently has net operating income of $491,000 and pays interest expense of $198,000. The c

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The Karson Transport Company currently has net operating income
of $491,000 and pays interest expense of $198,000. The company
plans to borrow $1.08 million on which the firm will pay 9 percent
interest. The borrowed money will be used to finance an investment
that is expected to increase the​ firm's net operating income
by $410,000 a year.
a. What is​ Karson's times interest earned ratio before the
loan is taken out and the investment is​ made?
b. What effect will the loan and the investment have on
the​ firm's times interest earned​ ratio?
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