Answer:
b
Explanation:
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Answer:
The maximum capital budget that is consistent with maintaining the target capital structure is $785,714
Explanation:
The computation of the maximum capital budget is shown below:
= Net income × (debt percentage ÷ equity percentage)
= $550,000 × (30% ÷ 70%)
= $235,714
The net income would be equal to equity i.e $550,000 as it reflect the maximum amount
So, the total and maximum amount of the capital structure would be
= $550,000 + $235,714
= $785,714
Answer: A. No, because he is taking out more debt then he will ever be able to pay back.
Explanation:
Getting the finance to foot one's bills could come from many different sources, one of which is to put in for a loan. However, the advice to secure a loan might best be given by a finance expert who has the knowledge and expertise required to adequately access the value of the loan, the probable return on investment and ayher embedded considerations. In the scenario given above, taking out a loan of up to $100,000 in other to target the job of finally landing a teaching job at a nursery school which would on average return a meagre pay than cannot be pitted with the loan value would be considered unreasonable on average by a finance professional simply because the return on investment will probably be nothing near the value of the loan. This way, the debt incurred from due to the loan application may never be returned from the intended job.
Answer:
$10,440,000
Explanation:
The computation of Total liabilities is shown below:-
Balance Sheet
Current liability
Current portion of long term debt $7,200,000
Long term liability
Notes payable $3,240,000
Total Liabilities $10,440,000
Working Note
Notes Payable = $39.6 million - $7.2 million
= $32.4 million
