Using a modified discriminant function similar to Altman's, Burger Bank estimates the following coefficients for its portfolio of loans:

$Z=1\mathrm{.}4x_1+1\mathrm{.}09x_2+1\mathrm{.}5x_3$

where $x_1=$ debt to asset ratio; $x_2=$ net income $(0\mathrm{.}12)$ and $x_3=$ dividend payout ratio $(0\mathrm{.}60).$

Using $Z=1\mathrm{.}682$ as the cut$-$off rate, what should be the debt to asset ratio of the firm in order for the bank to approve the loan?

Exam#$2\_$Formulas.pdf

$0\mathrm{.}465$

$0\mathrm{.}250$

$0\mathrm{.}654$

$0\mathrm{.}565$

$0\mathrm{.}348$