The firm is contemplating the following (base case): Vehicle acquisition cost $ 48,000 Years of useful life (economic life) 1 Tax rate 25% Required rate of return on equity 11% Required return on debt...

The firm is contemplating the following (base case):

Vehicle acquisition cost                                                     $ 48,000

Years of useful life (economic life)                                      1

Tax rate                                                                             25%

Required rate of return on equity                                    11%

Required return on debt                                                     6%

Debt ratio                                                                          40%

Annual revenues                                                         $ 175,000

Operating expenses (excluding depreciation)            $ 115,000

1.Depreciate straight-line over the year of useful life, down to $0 over one year.

1. The maximum dividend is paid at year end.


2. Ignore any working capital effects.


3. Capital charge will be based on the assets at the beginning of each year.

What's the times-interest-earned?