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Question 5 Lights Ltd. has raised funds by way of a bank loan. The bank loan came with a covenant of the company maintaining a

Question 5

Lights Ltd. has raised funds by way of a bank loan. The bank loan came with a covenant of the company maintaining a debt ratio of 0.5. The company currently has total assets of R1 000 000 and total liabilities of R500 000. How much more can the company borrow without breaching its covenant?

A. R0

B. R500 000

C. R1 000 000

D. R1 500 000

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