None Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-termbank loan. Selected account balances at March 31, 2022, for Business Solutions follow.Total assetsRequired:$121,068 Total liabilities$867 Total equity$120,2011. 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 0.88. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from thisbank?Note: Round your intermediate calculations to the nearest dollar amount.2. Assume Business Solutions borrows the maximum amount allowed from the bank.Note: Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place.(a) What percentage of assets would be financed by debt?(b) What percentage of assets would be financed by equity?1. Maximum amount2. (a) Percentage of assets financed by debt2. (b) Percentage of assets financed by equity%%

1. Maximum Allowable Total Liabilities: - This step involves determining the maximum amount of…

Answered: Santana Rey has consulted with her…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.4DC

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Young Company has a 7 percent annual interest rate on its bank loan which the company is in the process of repaying. The loan currently has a principal balance of $15 million. Young Company provides financial statements to the bank in order to meet the bank's loan requirements. Young prepares its financial statements with some help from a local CPA, who provides advice in preparing journal entries and closing the books. Young Company approached several other banks and found two that were willing to offer loans at competitive rates. Country Valley Bank offers a 6 percent annual interestrate for small businesses that involve a CPA in helping prepare their financial statements. Communitv Bank offers a 4.5 percent rate on its loan but would require that Young Company have its financial statements separately audited by an independent CPA firm each year to get that lower rate. Young Company reached out to a local CPA firm and received an estimate of $145,000 annually to provide an…
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