Question
Company ABC has total liabilities of $660,000 and total equity of $342,000. The company needs to raise additional funds through debt and equity. The company
Company ABC has total liabilities of $660,000 and total equity of $342,000. The company needs to raise additional funds through debt and equity. The company will issue 12,000 shares of common stock at $15 per share and in addition it intends to borrow as much as it can from Bank of XYZ. Bank of XYZ requires a maximum debt-to-asset ratio of 0.64. What is the maximum additional amount that Company ABC can borrow after the additional stock is issued?
Select one:
a. $96,480
b. $268,000
c. The company already reached the maximum and cannot borrow more
d. $164,332
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Get StartedRecommended Textbook for
Microeconomics
Authors: Paul Krugman, Robin Wells
3rd edition
978-1429283427, 1429283424, 978-1464104213, 1464104212, 978-1429283434
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