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Suppose a company has an EBITDA of 150% to their interest payments

Finance

Suppose a company has an EBITDA of 150% to their interest payments. They have a promising new investment that could double profits but would increase debt by 20%. How would you think of this as a bondholder? Now assume that they have a competitor with virtually identical EBITDA and debt levels. This competitor is going to invest in this new product line and this product line would eat away at your firm's profits. How would you think about this as a bondholder?

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