Question
Montclair Company is considering a project that will require a $690,000 loan. It presently has total liabilities of $125,000 and total assets of $715,000.
Montclair Company is considering a project that will require a $690,000 loan. It presently has total liabilities of $125,000 and total assets of $715,000. 1. Compute Montclair's (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $690,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky? Choose Numerator: Choose Denominator: Debt-to-Equity Ratio 1. (a) 1. (b) 2. If Montclair borrows the funds, does its financing structure become more or less risky?
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Fundamental accounting principle
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