Using a Modified Discriminant Function Similar to Altman's, Burger Bank

question 41

Multiple Choice

Using a modified discriminant function similar to Altman's, Burger Bank estimates the following coefficients for its portfolio of loans: Z = 1.4X₁ + 1.09X₂ + 1.5X₃

where X₁ = debt to asset ratio; X₂ = net income and X₃ = dividend payout ratio.
What is the Z-score if the debt to asset ratio is 40 percent, net income is 12 percent, and the dividend payout ratio is 60 percent?

• A)1.59.
• B)1.48.
• C)1.36.
• D)1.28.
• E)1.20.

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