Use the Table for the Question(s) Below

question 4

Multiple Choice

Use the table for the question(s) below.
Luther Industries currently has the following balance sheet (in Thousands of dollars) :
Luther is about to add a new fleet of delivery trucks. The price of the fleet is $1.5 million.
-If Luther acquires the new fleet of delivery trucks using an operating lease, Luther's debt-to-equity ratio will be closest to ________.

• A) 2.0
• B) 1.5
• C) 0.80
• D) 0.66

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Definitions:

Subscription Price

The cost at which existing shareholders can purchase additional shares in a company, often at a discount during a rights issue.

Rights Offering

An offering where existing shareholders have the right, but not the obligation, to purchase new shares at a discount to the public offering price, within a specific time frame.

Stock Price

The current price at which a share of stock can be bought or sold on the stock market.

Bought Deal

One underwriter buys securities from an issuing firm and sells them directly to a small number of investors.