At the beginning of a year Company X has opted to

At the beginning of a year, Company X has opted to sell all of its $450,000 of receivables to finance a reduction in its long-term debt. The receivables and the risk of default are transferred at 80% of their book value. The debt reduction will reduce interest expense from $50,000 to $25,000 per year. The effective tax rate is 30%. Assuming that the current year’s EBIT is $142,500, at the end of the year, the results of the receivables sale will be an interest coverage ratio closest to:
A. 1.1X.
B. 2.1X.
C. 3.1X.