Question: Montclair Company is considering a project that will require a $500,000 loan. It presently has total liabilities of $220,000, and total assets of $610,000. 1.

Montclair Company is considering a project that will require a $500,000 loan. It presently has total liabilities of $220,000, and total assets of $610,000.
1. Compute Montclair’s
(a) Present debt-to-equity ratio
(b) The debt-to-equity ratio assuming it borrows $500,000 to fund the project.
2. Evaluate and discuss the level of risk involved if Montclair borrows the funds to pursue the project.

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1a Current debttoequity ratio 220000 390000 0564 Total equity 610000 220000 390000 1b Potential d... View full answer

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