The Times Interest Earned Computation Is

question 17

Multiple Choice

The times interest earned computation is:

• A) (Net income + Interest expense + Income taxes)/Interest expense.
• B) (Net income + Interest expense - Income taxes)/Interest expense.
• C) (Net income - Interest expense - Income taxes)/Interest expense.
• D) (Net income - Interest expense + Income taxes)/Interest expense.
• E) Interest expense/(Net income + Interest expense + Income taxes expense).

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Definitions:

Equivalent Value

A monetary value considered to be equal in value, worth, or function to another in a different form or market.

Rate of Return

The gain or loss on an investment over a specific period, expressed as a percentage of the investment's initial cost.

Scheduled Payments

Predetermined amounts of money paid at regular intervals under the terms of a loan or investment agreement.

Compounded Monthly

Interest calculation method where the interest is added to the principal amount every month, leading to interest being earned on interest.