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What is the maximum additional amount

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Question - On Dec 31, 2019, OTTO Inc. has total assets of $414,000 and total equity of $245,000. The company will raise additional capital through debt and equity. The company will issue 73,025 shares of common stock at $4 per share and in addition it intends to borrow as much as it can from a bank. The bank, however, requires a maximum debt-to-asset ratio of 0.7.

Required - What is the maximum additional amount that Otto can borrow after the additional stock is issues?

a. $1,084,233

b. $295,671

c. $689,900

d. $669,511

Reference no: EM132803143

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