Question: Using a modified discriminant function similar to Altmans, Burger Bank estimates the following coefficients for its portfolio of loans: Z=1.2X_1+1.19X_2+1.35X_3 Where X1 = debt to

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

Z=1.2X_1+1.19X_2+1.35X_3

Where X1 = debt to asset ratio; X2 = net income and X3 = dividend payout ratio.

What is the Z-score if the debt to asset ratio is 33 percent, net income is 12 percent, and the dividend payout ratio is 50 percent? Using Z=1.682 as the cut-off rate, what should be the debt to asset

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