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Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2021, for Business Solutions follow. Total assets $ 121,768 Total liabilities $ 860 Total equity Required: 1. The bank has offered a long-term secured note to Business Solutions. The bank's loan procedures require that a client's debt-to- equity ratio not exceed 0.75. As of March 31, 2021, what is the maximum amount that Business Solutions could borrow from this bank? Note: Round your intermediate calculations to the nearest dollar amount. 2. Assume Business Solutions borrows the maximum amount allowed from the bank. 1. Maximum amount 2. (a) Percentage of assets financed by debt 2. (b) Percentage of assets financed by equity 120,908 Note: Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place. (a) What percentage of assets would be financed by debt? (b) What percentage of assets would be financed by equity? % % Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2021, for Business Solutions follow. Total assets $ 121,768 Total liabilities $ 860 Total equity Required: 1. The bank has offered a long-term secured note to Business Solutions. The bank's loan procedures require that a client's debt-to- equity ratio not exceed 0.75. As of March 31, 2021, what is the maximum amount that Business Solutions could borrow from this bank? Note: Round your intermediate calculations to the nearest dollar amount. 2. Assume Business Solutions borrows the maximum amount allowed from the bank. 1. Maximum amount 2. (a) Percentage of assets financed by debt 2. (b) Percentage of assets financed by equity 120,908 Note: Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place. (a) What percentage of assets would be financed by debt? (b) What percentage of assets would be financed by equity? % %
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Answer rating: 100% (QA)
1 The banks debttoequity ratio limit is 075 Given Total equity 120908 To calculate maximum debt ... View the full answer
Related Book For
Financial Accounting Information For Decisions
ISBN: 9781260705584
10th Edition
Authors: John J. Wild
Posted Date:
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