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		$64,000		Current liabilities		$27,000
Non-current assets		92,000		Long-term liabilities		52,000
				Shareholders equity		77,000
Total assets		$156,000		Total liabilities and shareholders equity		$156,000

The companys management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $35 million.

Taube has a cash balance of $20 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 companys long-term liabilities are interest bearing. (Round answers to 2 decimal places, e.g. 1.25.)

Debt to Equity		:1
Net Debt as a Percentage of Total Capitalization		:1

Taube is considering borrowing $35 million by taking out a six-year bank loan that carries 10% interest payable semi-annually. Determine the companys 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
Net Debt as a Percentage of Total Capitalization		:1

As an alternative to the bank loan, management is considering issuing $35 million six-year bonds. The bonds pay 3% interest semi-annually and would be issued at 90.61 to yield 8%. Determine the companys 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
Net Debt as a Percentage of Total Capitalization		:1

Which of options "bank loan" (b) or bonds (c) is the better option for Taube and why?

The bondsbank loan would be a better option as they would have a higher interest ratelower interest ratehigher debt to equitylower debt to equityhigher net debt as a percentage of total capitalizationlower net debt as a percentage of total capitalization.