Is the borrowing a good idea for the business

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Reference no: EM132726766

Assume that XYZ tires has the following totals on its balance sheet:

Assets: $100,000

Liabilities: $40,000

XYZ Tires now borrows $50,000 from the bank.

Problem 1. How will the totals for assets and liabilities be affected by the loan? Explain.

Problem 2. Is the borrowing a good idea for the business? Why or why not?

Problem 3. How might the business use the $50,000?

Problem 4. What other information would be useful to have before deciding to take out the loan?

Reference no: EM132726766

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