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tino4ka555 [31]
3 years ago
8

Montclair Company is considering a project that will require a $610,000 loan. It presently has total liabilities of $165,000 and

total assets of $675,000. 1. Compute Montclair’s (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $610,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky?
Business
1 answer:
Leya [2.2K]3 years ago
6 0

Answer:

32.35%  or 0.33

151.96%   or 1.52

The new borrowing would make the financing structure more risky since the amount of fixed interest payment would increase significantly

Explanation:

Current debt to equity ratio:

Debt to equity=debt amount/equity amount

Current debt  is $165,000

current equity is $675,000

equity =total assets-debt

debt to equity ratio=$165,000/($675,000-$165,000)=32.35%

If the $610,000 is borrowed ,the debt value would increase by $610,000

new debt value=$165,000+$610,000=$ 775,000.00  

New debt to equity ratio= $775,000.00/$510,000.00=151.96%

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Answer:

The statement is: True.

Explanation:

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3 years ago
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Project A requires a $ 385,000 initial investment for new machinery with a five year life and a salvage value of . The company u
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Answer:

4.2 years

Explanation:

Here is the complete question

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Compute Project A's payback period.

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a boy is three years younger than his sister. two years ago he was two-thirds of his sister's age. what are their present ages ​
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The boy: 8 years old

The sister: 11 years old

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We assume that the age at present of the boy is x (years old).

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=> Her present age is: x + 3 (years old)

Two years ago, the boy is younger than present two years

=> The boy's age two years ago is: x - 2 (years old)

Similarly, the sister's age two years ago is: (x+3)-2 = x + 1 (years old)

As given, two years ago he was two-thirds of his sister's age, so that we have:

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