Question

tList Joe owns and operates Sococer Stores of America. He has $375000 of his own money in the business as oquity capital, but because of the use of debt, the total value of his stores is $800000 Calculate the percentage of debt in the oorporation, and the oorporations levernge factor Percentage of debt in the corporation Place your answer in peroentage fon with two dealmel places The corporations levenage factor Place your answer as a number with two decimal places ion ion CHECK ANSWER
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Answer #1
Calculation of the Debt Value
Total value of the stores = $       8,00,000
Less: Value of the equity = $       3,75,000
Value of the Debt = $       4,25,000
Answer = 1
% of debt in the corporation = Total Debt / Total Value of the stores
% of debt in the corporation = $       4,25,000 "/"By   $ 8,00,000
% of debt in the corporation = 0.5313
% of debt in the corporation = 53.13%
Answer =2
The Corporation levergae Factor = Total Debt "/"By Total Equity
The Corporation levergae Factor = $       4,25,000 "/"By $ 3,75,000
The Corporation levergae Factor =                    1.13
Answer = 1.13
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