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Secure httpsl/ng.cengage.com/static/nb/ui/evo/index.html?deploymentid 551651215053483539471157998telSBN-978130563. AP ework Q Search this course t: Module 1 Homework Assignment Score: B833% SaveSubmit Assignment for Grading Problem 418 Question 19 of 20 Check My Work (2 remaining) Click here to read the eBook: Debt Management Ratios TIE RATIo MP1 Incorporated has $4 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 12%, and its return on (ROA) is 6%. What is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places. Hide Feedback Incorreet Check My Work(2 remaining) Icon Keay Probleas 4 18 6 7

Explanation / Answer

BEP ratio=EBIT/Assets=12%

EBIT/4=12%

EBIT=4*12%=0.48 billion

net income=return on assets*assets

=6%*4

=0.24 billion

net income before taxes=0.24/(1-35%)=0.3692 billion

TIE ratio=EBIT/interest expense

=0.48/(0.48-0.3692)

=4.33

the above is answer..

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