The statement of financial position as of December 31, 2020, for Taube Corporation follows: (all amounts in thousands) Assets Current assets Non-current assets $63.000 96.000 Liabilities and Shareholders' Equity Current liabilities $26,000 Long-term liabilities 47,000 Shareholders' equity 86,000 Total liabilities and shareholders' equity $159,000 Total assets $159,000 The company's management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $32 million. Your answer is partially correct. Taube has a cash balance of $21 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 :1 Net Debt as a Percentage of Total Capitalization 0.23 :1 e Textbook and Media Assistance Used e Textbook Your answer is partially correct. Taube is considering borrowing $32 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, eg. 1.25.) Debt to Equity :1 Net Debt as a Percentage of Total Capitalization 0.40 : 1 e Textbook and Media . Your answer is partially correct. As an alternative to the bank loan, management is considering issuing $32 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 Net Debt as a Percentage of Total Capitalization 0.40 :1 e Textbook and Media Your answer is partially correct. Which of options "bank loan" (b) or "bonds" (c) is the better option for Taube and why? The bonds would be a better option as they would have a higher net debt as a percentage of total capitalization Your answer is partially rect. higher interest rate Which of options "bank loan" (b) or "bonds" (c) is the better option fe lower interest rate higher debt to equity lower debt to equity The bonds would be a better option as they would have a higher net debt as a percentage of total capitalization lower net debt as a percentage of total capitalization e Textbook and Media
