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Q1) Alumbat Corporation has $800,000 of debt outstanding, and it pays the interest rate of 10 percent annually on its bank loan. Alumbat's annual sales are $3,200,000; its average tax rate is 40 percent; and its net profit margin on sales is 6 percent. If company doesn't maintain TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. Compute Alumbat's current TIE ratio?

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