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  1. business
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  3. last year, arbor corporation reported the followin

Last year, Arbor Corporation reported the following: Balance Sheet Total Assets $ 800,000...

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Accounting

Last year, Arbor Corporation reported the following:
Balance Sheet
Total Assets $ 800,000
Total Liabilities 500,000
Total Shareholders' Equity $ 300,000
This year, Arbor is considering whether to issue more debt to fund a $100,000 project or to issue additional shares of common stock. Both options will bring in exactly $100,000. Arbor's current debt contracts contain a debt covenant that requires it to maintain a debt-to-equity ratio of 2.0 or less.
Required:
Calculate Arbor's current debt-to-equity ratio.
Calculate Arbor's debt-to-equity ratio assuming it funds the project using additional debt.
Calculate Arbor's debt-to-equity ratio assuming it funds the project by issuing common stock.

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