A Firm Has $4 Million in Total Assets and $2

question 43

Multiple Choice

A firm has $4 million in total assets and $2.2 million in equity.How much of its $500,000 capital budget should be debt-financed to retain the same debt-equity ratio?

• A) $50,000
• B) $225,000
• C) $275,000
• D) $450,000

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Definitions:

Aldehyde Treatment

A chemical process involving the reaction of an aldehyde group, often resulting in the introduction of new functional groups.

LiAlH4

Lithium aluminium hydride, a powerful reducing agent widely employed in organic chemistry for reducing carbonyl compounds to alcohols.

Primary Alcohol

An alcohol with the hydroxyl group (-OH) attached to a carbon atom that is connected to only one other carbon atom.

Grignard-Based Synthesis

A method of forming carbon-carbon bonds by reacting Grignard reagents (organomagnesium compounds) with electrophiles, crucial in the formation of alcohols, carboxylic acids, and other functional groups.