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(Capital structure analysis) The Karson Transport Company currently has net operating income of 5500,000 and...

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(Capital structure analysis) The Karson Transport Company currently has net operating income of 5500,000 and pays interest expense of $198,000. The company plans to borrow $1.01 million on which the firm will poy 8 percent interest. The berrowed money wilt bo used to fhance an investment that is expected to increase the firmis net operating income by $406,000 a year. a. What is Karson's times imterest earned ratio before the lean is taken out and the imestment is made? b. What effect will the loan and the investment have on the firm's tmes interost earned ratio? a. What is Karson's times interest earned ratio before the loan is taken out and the investment is mado? The times interest eamed ratio is times. (Round to two decimal places:)

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