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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Seedly Corporation's most recent balance sheet reports total assets of $35,000 and total liabilities of $17,500,000. Management is considering issuing $5,000,000 of par value bonds (at par) with maturity date of ten years and a contract rate of 7%. What effect, if any, would issuing the bonds have on the company's debt-to-equity ratio?
a. Issuing the bonds would cause the firm's debt
-to-equity ratio to improve from 1.0 to 1.3.
b. Issuing the bonds would cause the firm's debt-to-equity ratio to worsen from 1.0 to 1.3
c. Issuing the bonds would cause the firm's debt-to-equity ratio to remain unchanged
d. Issuing the bonds would cause the firm's debt-to-equity ratio to improve from .5 to .8
e. Issuing the bonds would cause the firm's debt-equity ratio to worsen from .5 to .8
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