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 $121,868 Total Habilities ses9 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 074. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from this bank? (Round your intermediate calculations to the nearest dollar amount) 2. Assume Business Solutions borrows the maximum amount allowed from the bank (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 S 163 827 860% 140% $121,009

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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, 2022, for Business Solutions follow
$121,868 Total Habilities
$859 Total equity
$121,009
Total assets
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 074. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from this bank?
(Round your intermediate calculations to the nearest dollar amount)
2. Assume Business Solutions borrows the maximum amount allowed from the bank [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
S 163.827
860%
14.0%
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 $121,868 Total Habilities $859 Total equity $121,009 Total assets 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 074. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from this bank? (Round your intermediate calculations to the nearest dollar amount) 2. Assume Business Solutions borrows the maximum amount allowed from the bank [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 S 163.827 860% 14.0%
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