Louisiana State University, Shreveport ACCOUNTING ACCOUNTING Acct 701 On December 31, 2015, Sveva Inc. has total liabilities of $252,000…
On December 31, 2015, Sveva Inc. has total liabilities of $252,000 and total equity of $420,000. The company needs to raise additional funds through debt and equity. The company will issue 40,000 shares of common stock at $4.50 per share and in addition it intends to borrow as much as it can from Bank of Switzerville. Bank of Switzerville requires a maximum debt-to-asset ratio of 0.75.
What is the maximum additional amount that Sveva can borrow after the additional stock is issued?
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