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A company is considering taking out $10.

A company is considering taking out $10.000,000 of floating rate bank borrowings to finance a new project. The current rate available to the company on floating rate barrowings is 8%. The borrowings contain a covenant based on an interested cover of5times.

The project is expected to generate the following results:

At what interest rate on the floating rate borrowings is the bank covenant first breached?

A.

10.0%

B.

11.0%

C.

8.0%

D.

9.4%

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