Determine the borrowal amount through debentures


Question: Delaware Steel Company has 100 million dollar of thirteen percent debentures outstanding. The indenture [loan covenants] limits additional borrowing such that the total interest coverage [EBIT or interest] is at least 3 times. Delaware's EBIT last year was 52 million dollar. How much could Delaware borrow under a term loan at thirteen percent interest without breaching the indenture limits?

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Finance Basics: Determine the borrowal amount through debentures
Reference No:- TGS017602

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