At the end of 2020, Montvale Associates borrowed $120,000 from the Bay liner Bank. The debt covenant specified that Montvale's debt/equity ratio could not exceed 1.5: 1 during the period of the loan. A summary of Montvale's balance sheet after the loan follows.

a. Compute Montvale's debt/equity ratio immediately after the loan.
b. How much additional debt can the company incur without violating the debt covenant?
c. How large a dividend can the company declare and pay at the end of 2020 without violating the debt covenant?

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2020 Assets Current assets $130,000 Long-term assets 350,000 Total assets $480,000 Liabilities and Shareholders' Equity Current liabilities $130,000 Long-term liabilities 150,000 Shareholders' equity 200,000 Tulal llabilitles and shareholders' eqully $480,000