medium · Corporate Credit Analysis covenants
A high-yield bond indenture has a restricted payments builder basket that starts at $50M and grows by 50% of cumulative consolidated net income. In Year 1, the company earns $80M in net income and pays $20M in dividends.
What is the basket capacity at the start of Year 2?
- $110M
- $90M
- $130M
- $70M
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