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EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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
Transcribed Image Text:A company having total assets of $2,350,000 and liabilities of
$950,000 needed to raise $1,000,000 to purchase some land
for expansion. They could either borrow the funds using 20-
year bonds or they could issue 100,000 shares of common
stock at the estimated market price of $10 per share. What is
the debt/equity ratio if the $1 million is borrowed using
bonds?
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