On December 31, 2015, Sveva Inc. has total liabilities of $252,000 and total equity of $420,000. The company needs to raise additional funds through…

On December 31, 2015, Sveva Inc. has total liabilities of $252,000 and total equity of $420,000. The company needs to raise additional funds through debt and equity. The company will issue 40,000 shares of common stock at $4.50 per share and in addition it intends to borrow as much as it can from Bank of Switzerville. Bank of Switzerville requires a maximum debt-to-asset ratio of 0.75. 

What is the maximum additional amount that Sveva can borrow after the additional stock is issued?

Select one:

a. $639,000

b. $852,000

c. $1,236,000

d. $1,548,000

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