Question - On December 31, 2015, Sveva Inc. has total liabilities of $112,000 and total equity of $220,000. The company needs to raise additional funds through debt and equity. The company will issue 25,000 shares of common stock at $11.10 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 0.6.
What is the maximum additional amount that Sveva can borrow after the additional stock is issued?
a. $253,700
b. $332,330
c. $466,250
d. $634,250