Use the Table for the Question(s)below

question 73

Multiple Choice

Use the table for the question(s) below.

- Consider the above balance sheet for your firm (in thousands of dollars) .You plan on acquiring some new equipment using a $400,000 finance lease.If you go through with the lease,what will be your firm's new debt-equity ratio?

• A)0.63
• B)0.50
• C)1.27
• D)0
• E)1.0

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Definitions:

Transaction Costs

Transaction costs are expenses incurred when buying or selling a good or service, which include fees, taxes, and other charges associated with the transaction.

Absolute Purchasing Power Parity

A theory that suggests that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Forward Exchange Rates

Exchange rates determined today for currencies to be exchanged at a future date, used in hedging and speculation.

Spot Rates

The current market price of a financial instrument, commodity, or currency for immediate delivery and payment.