Question
If D/A is .45, according to the balance sheet identity what would be (a) D/E; and (b) the Equity Multiplier? a) D/(D+E) = .45, 1+E/D
If D/A is .45, according to the balance sheet identity what would be (a) D/E; and (b) the Equity Multiplier?
a) D/(D+E) = .45, 1+E/D = 1/0.45, E/D = 1.22, D/E = 0.8182. How did they go from E/D = 1.22 to get the D/E = 0.8182?
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Basic Finance An Introduction To Financial Institutions Investments And Management
Authors: Herbert B. Mayo, Michael J Lavelle
13th Edition
0357714741, 978-0357714744
