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, 2022, for Business Solutions follow. Total assets Required: $120,368 Total liabilities $874 Total equity $119,494 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 0.81. As of March 31, 2022, 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. 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? 1. Maximum amount 2. (a) Percentage of assets financed by debt 2. (b) Percentage of assets 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, 2022, for Business Solutions follow. Total assets Required: $120,368 Total liabilities $874 Total equity $119,494 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 0.81. As of March 31, 2022, 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. 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? 1. Maximum amount 2. (a) Percentage of assets financed by debt 2. (b) Percentage of assets financed by equity % %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Am. 113.
Transcribed Image Text: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, 2022, for Business Solutions follow.
Total assets
Required:
$120,368 Total liabilities
$874 Total equity
$119,494
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 0.81. As of March 31, 2022, 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.
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?
1. Maximum amount
2. (a) Percentage of assets financed by debt
2. (b) Percentage of assets financed by equity
%
%
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