The statement of financial position as of December 31, 2020, for Taube Corporation follows: (all amounts in thousands) Assets Liabilities and Shareholders' Equity Current assets $62,000 Current liabilities $22,000 Non-current assets 95,000 Long-term liabilities 47,000 Shareholders' equity 88,000 Total liabilities and Total assets $157,000 shareholders' equity $157,000 The company's management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $37 million. X Your answer is incorrect. Taube has a cash balance of $21 million as of December 31, 2020. Determine the debt to equity ratio and net debt as a percentage of total capitalization ratio. Assume that only the company's long-term liabilities are interest bearing. (Round answers to 2 decimal places, eg. 1.25.) Debt to Equity 0.78:1 Net Debt as a Percentage of Total Capitalization 2.87 :1

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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X Your answer is incorrect.
As an alternative to the bank loan, management is considering issuing $37 million six-year bonds. The bonds pay 3% interest semi-
annually and would be issued at 90.61 to yield 8%. Determine the company's long-term debt to equity and debt as a percentage of
total capitalization ratios if it decides to borrow money using bonds and purchase the equipment. (Round answers to 2 decimal
places, e.g. 1.25.)
Debt to Equity
:1
Net Debt as a Percentage of Total Capitalization
:1
eTextbook and Media
X Your answer is incorrect.
Which of options "bank loan" (b) or "bonds" (c) is the better option for Taube and why?
The
v would be a better option as they would have a
eTextbook and Media
Transcribed Image Text:X Your answer is incorrect. As an alternative to the bank loan, management is considering issuing $37 million six-year bonds. The bonds pay 3% interest semi- annually and would be issued at 90.61 to yield 8%. Determine the company's long-term debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow money using bonds and purchase the equipment. (Round answers to 2 decimal places, e.g. 1.25.) Debt to Equity :1 Net Debt as a Percentage of Total Capitalization :1 eTextbook and Media X Your answer is incorrect. Which of options "bank loan" (b) or "bonds" (c) is the better option for Taube and why? The v would be a better option as they would have a eTextbook and Media
The statement of financial position as of December 31, 2020, for Taube Corporation follows:
(all amounts in thousands)
Assets
Liabilities and Shareholders' Equity
Current assets
$62,000
Current liabilities
$22,000
Non-current assets
95,000
Long-term liabilities
47,000
Shareholders' equity
88,000
Total liabilities and
Total assets
$157,000
shareholders' equity
$157,000
The company's management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $37 million.
X Your answer is incorrect.
Taube has a cash balance of $21 million as of December 31, 2020. Determine the debt to equity ratio and net debt as a percentage
of total capitalization ratio. Assume that only the company's long-term liabilities are interest bearing. (Round answers to 2 decimal
places, e.g. 1.25.)
Debt to Equity
0,78
:1
Net Debt as a Percentage of Total Capitalization
2.87
:1
eTextbook and Media
X Your answer is incorrect.
Taube is considering borrowing $37 million by taking out a six-year bank loan that carries 10% interest payable semi-annually.
Determine the company's debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow the money
and purchase the equipment. (Round answers to 2 decimal places, eg. 1.25.)
Debt to Equity
1.20
:1
Net Debt as a Percentage of Total Capitalization
:1
eTextbook and Media
Transcribed Image Text:The statement of financial position as of December 31, 2020, for Taube Corporation follows: (all amounts in thousands) Assets Liabilities and Shareholders' Equity Current assets $62,000 Current liabilities $22,000 Non-current assets 95,000 Long-term liabilities 47,000 Shareholders' equity 88,000 Total liabilities and Total assets $157,000 shareholders' equity $157,000 The company's management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $37 million. X Your answer is incorrect. Taube has a cash balance of $21 million as of December 31, 2020. Determine the debt to equity ratio and net debt as a percentage of total capitalization ratio. Assume that only the company's long-term liabilities are interest bearing. (Round answers to 2 decimal places, e.g. 1.25.) Debt to Equity 0,78 :1 Net Debt as a Percentage of Total Capitalization 2.87 :1 eTextbook and Media X Your answer is incorrect. Taube is considering borrowing $37 million by taking out a six-year bank loan that carries 10% interest payable semi-annually. Determine the company's debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow the money and purchase the equipment. (Round answers to 2 decimal places, eg. 1.25.) Debt to Equity 1.20 :1 Net Debt as a Percentage of Total Capitalization :1 eTextbook and Media
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