Grindle Ltd Has Total Assets of $1

Multiple Choice

Grindle Ltd has total assets of $1.5 million and liabilities of $0.9 million before it issues $300,000 in preference shares.What is the debt to asset ratio assuming that the preference shares have no voting rights and offer a fixed dividend rate of 10 per cent and (a) are redeemable at the discretion of the issuer and (b) have a scheduled date for mandatory redemption?

A) (a) 60 per cent (b) 80 per cent
B) (a) 50 per cent (b) 67 per cent
C) (a) 80 per cent (b) 60 per cent
D) (a) 67 per cent (b) 50 per cent
E) None of the given answers.