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Rudy Company Has Total Assets, Liabilities, and Shareholders' Equity of $35,000

question 38

Essay

Rudy Company has total assets, liabilities, and shareholders' equity of $35,000, $28,000, and $7,000, respectively. Assume no material change occurred during the year to totals on the balance sheet. What amount of long-term debt must Rudy exchange for new shares of common stock issued in order to decrease its debt/equity ratio to 1.0?
a. $17,500
b. $10,500
c. $14,000
d. $21,000


Definitions:

Alveolar Dead Space

is the portion of the respiratory system where alveoli are ventilated but not perfused with blood, thus not participating in gas exchange.

Tidal Volume

The volume of air that is inhaled or exhaled in a normal breath at rest.

Respiratory Capacities

the combined volumes of air that the lungs are capable of holding, considered in different phases of respiration.

Vital Capacity

The maximum amount of air a person can expel from the lungs after a maximum inhalation.

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