Moon Corporation and Star Corporation are in the same line ofbusiness and both were recently organized, so it may be assumedthat the recorded costs for assets are close to current marketvalues. The balance sheets for the two companies are as follows atJuly 31, current year.

MOON CORPORATION BALANCE SHEET JULY 31, CURRENTYEAR

Assests

Cash 21600

Acounts receivable 31200

Office equipment 1400

Building 45600

land 44640

total: 144480

Liabilities

Notes payable (due in 60 days) 14880

accounts payable 11520

stock holders equity:

Capital stock 72000

Retained Earnings: 46080

Total: 144480

Star Corporation Balance Sheet July 31, currentyear

Assets

Cash 5760

Accounts receivable 11520

Office equipment 14400

building 72600

land 115200

Liabilities

Notes Payable (due in 60 days) 26880

accounts payable 51840

Stock Holders Equity:

Capital stock: 86400

Retained earnings: 53760

Total: 218880

A) Assume that you are a banker and that each company hasapplied to you for a 90-day loan of $12,000. Which would youconsider to be the more favorable prospect? Explain your answerfully.

B) Assume that you are an investor considering purchasing allthe capital stock of one or both of the companies. For whichbusiness would you be willing to pay the higher price? Do you seeany indication of a financial crisis that you might face shortlyafter buying either company? Explain your answer fully. (For eitherdecision, additional information would be useful, but you are toreach your decision on the basis of the information available.)