Scenario #1: XYZ Corporation Balance Sheet Assets $70,000,000 Debt-to-equity ratio 17% Scenario #2: Debt $10,000,000 Equity $60,000,000 Debt-to-capital ratio 14% XYZ Corporation Balance Sheet Assets $70,000,000 Debt Equity $20,000,000 $50,000,000 Debt-to-equity ratio 40% Scenario #3: Debt-to-capital ratio 29% XYZ Corporation Balance Sheet Assets $70,000,000 Debt Equity $30,000,000 $40,000,000 Debt-to-equity ratio 75% Debt-to-capital ratio 43%

Scenario #1: XYZ Corporation Balance Sheet Assets $70,000,000 Debt-to-equity ratio 17% Scenario #2: Debt $10,000,000 Equity $60,000,000 Debt-to-capital ratio 14% XYZ Corporation Balance Sheet Assets $70,000,000 Debt Equity $20,000,000 $50,000,000 Debt-to-equity ratio 40% Scenario #3: Debt-to-capital ratio 29% XYZ Corporation Balance Sheet Assets $70,000,000 Debt Equity $30,000,000 $40,000,000 Debt-to-equity ratio 75% Debt-to-capital ratio 43%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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