The statement of financial position as of December 31, 2020, for Taube Corporation follows:

(all amounts in thousands)

Assets				Liabilities and Shareholders Equity
Current assets		$59,000		Current liabilities		$26,000
Non-current assets		101,000		Long-term liabilities		53,000
				Shareholders equity		81,000
Total assets		$160,000		Total liabilities and shareholders equity		$160,000

The companys management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $33 million.

A)

B)

C)

D)

Taube has a cash balance of $19 million as of December 31, 2020. Determine the debt to equity ratio and net debt as a percentage of total capitalization ratio. Assume that only the company's long-term liabilities are interest bearing. (Round answers to 2 decimal places, e.g. 1.25.) Debt to Equity 0.98 :1 Net Debt as a Percentage of Total Capitalization 0.43 :1 Taube is considering borrowing $33 million by taking out a six-year bank loan that carries 10% interest payable semi-annually. Determine the company's debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow the money and purchase the equipment. (Round answers to 2 decimal places, e.g. 1.25.) Debt to Equity 1.38 :1 Net Debt as a Percentage of Total Capitalization 0.53 :1 As an alternative to the bank loan, management is considering issuing $33 million six-year bonds. The bonds pay 3% interest semi-annually and would be issued at 90.61 to yield 8%. Determine the company's long-term debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow money using bonds and purchase the equipment. (Round answers to 2 decimal places, e.g. 1.25.) Debt to Equity 1.38 :1 Net Debt as a Percentage of Total Capitalization 0.54 :1 Which of options "bank loan" (b) or bonds (c) is the better option for Taube and why? The bank loan would be a better option as they would have a lower net debt as a percentage of total capitalizat