Lever Age pays an 8 percent coupon on outstanding debt with face value $10 million. The firm's EBIT was $1 million.
1. What is times interest earned?
2. If depreciation is $200,000, what is cash coverage?
3. If the firm must retire $300,000 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)?