1. Info Technics Inc. has total assets equal to $1,000,000. Its total current liabilities equal $200,000 and it has no short-term debt. The firm’s total equity equals $500,000. What is the firm’s total debt to total capital ratio?
a. 25.00%
b. 42.75%
c. 45.00%
d. 37.50%
e. 30.33%
2. During 2009, Raines Umbrella Corp. had sales of $743,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $572,000, $94,000, and $125,000, respectively. In addition, the company had an interest expense of $103,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corp. paid out $23,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt?
a) $49,000
b) $0
c) $100,000
d) $77,450
e) $25,500