Montreal Brewing Company Has an Outstanding Debt of $20 Million

question 59

Multiple Choice

Montreal Brewing Company has an outstanding debt of $20 million.10 percent of the company debt bears an interest cost of 8 percent and the rest costs 6 percent.If their earnings before taxes are $5.2 million,then their times-interest-earned ratio would be:

• A) 3.2
• B) 4.2
• C) 5.2
• D) None of the above

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Definitions:

Analogical

Pertaining to analogy; the process of finding correspondences or logical relations between seemingly dissimilar things.

Directed Thinking

Thought that is focused, goal-oriented, and follows logical steps towards a specific conclusion.

Mental Set

The perspective that a person takes and the assumptions he makes in approaching a problem.

Analogical Representation

A mental representation of one thing that is similar in some way to another; used in problem-solving and reasoning.