Hogi-Yogi Co

Multiple Choice

Hogi-Yogi Co. has total debt of $252,000 and stockholders' equity of $420,000. Hogi-Yogi is seeking capital to fund an expansion. Hogi-Yogi is planning to issue an additional $180,000 in common stock, and is negotiating with a bank to borrow additional funds. The bank requires a maximum debt ratio of .75. What is the maximum additional amount Hogi-Yogi will be able to borrow after the common stock is issued?

A) $639,000
B) $852,000
C) $1,236,000
D) $1,548,000