Question
On December 31, 2015, Sveva Inc. has total liabilities of $652,000 and total equity of $168,000. The company needs to raise additional funds through debt
On December 31, 2015, Sveva Inc. has total liabilities of $652,000 and total equity of $168,000. The company needs to raise additional funds through debt and equity. The company will issue 33,000 shares of common stock at $7 per share and in addition it intends to borrow as much as it can from Bank of Switzerville. Bank of Switzerville requires a maximum debt-to-asset ratio of 0.7. What is the maximum additional amount that Sveva can borrow after the additional stock is issued?
Select one:
a.
$83,700
b.
$265,654
c.
$0 (the limit has already been reached)
d.
$279,000
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