Its bank agrees to lend up to 4 times its EBITDA. How much debt can the firm borrow from the bank?

Suppose a firm has an EBIT of $5 million, interest expenses of $2 million, depreciation expenses of $1 million, and a tax rate of 35 percent. Its bank agrees to lend up to 4 times its EBITDA. How much debt can the firm borrow from the bank?

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