W/o Debt With Debt (25,000)

1st 2nd 3rd

EBITDA 5000 5000 5000 5000
Depreciation 2000 2000 2000 2000
EBIT 3000 3000 3000 3000
Interest 0 1300 1750 2062.5
Int Cov Ratio= (EBIT/Int) infinity 2.31 1.71 1.45
Credit Rating AAA BB B B-
Interest% (RF+spread) 5.20% 7% 8.25% 9.25%

Reqd coverage ratio 1.75-2.0

1.75= 3000/(7.50% * Debt)
Debt 22857.14
Share to be brought back 45.7%
Debt (25,000)
4th 5th <-- Iteration
5000 5000
2000 2000
3000 3000
2312.5 2312.5
1.30 1.30
B-
9.25%