Check my work 2 Santana Rey has consulted with her local banker and is consideri

Question

Check my work 2 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, 2018, for Business Solutions follow l?Total 10 points 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 0.89. As of March 31, 2018, what is the maximum amount that Business Solutions could borrow from this bank? (Round your intermediate calculations to the nearest doller amount.) eBook $ 106,202 2. Assume Business Solutions borrows the maximum amount allowed from the bank (aj What percentage of assets would be financed by debt? (Round your intermediete dollar volues to the nearest whole number and final answer to 1 decimal place.) ?Prev 2012 Next ESP 10 US 05/02

Explanation / Answer

Req 1 Rrequired Debt Equity ratio: 0.89 Equity 120302 Existing debtss 866 Now, To fulfill banking norms, total debts which could be: Debt equity ratio = Total Debts / Equity 0.89   = Total Debts / $ 120302 Total Debts (120302*.89) 107069 Less: Existing debts 866 Borrowing from bank 106203 Req 2: Total Assets (121168+106203) 227371 Total debts (866+106203) 107069 % of Assets financed by debts = 107069/227371 = 47.09% Req 2-b: Total Assets 227371 Total Equity 120302 % of Assets financed by Equity: 120302 /227371 *100 = 52.91%

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