Orem Corporation's current liabilities are $106,800, its long-term liabilities are $267,200, and its working capital is $149,500. If the corporation's debt-to-equity ratio is 0.10, total long-term assets must equal:
$2,789,700
$3,964,500
$3,740,000
$3,857,700
Calculation of amount of long term assets | |||||
Total debt = Current laibilities+long term laibilities | |||||
total debt = 106800+267200 | |||||
total debt = 374000 | |||||
Debt to equity ratio= 0.10 | |||||
Total equity = total debt / 0.10 | |||||
total equity = 374000/0.10 | |||||
total equity = 3740000 | |||||
total assets = total debt+total equity | |||||
total assets = 374000+3740000 | |||||
total assets = 4114000 | |||||
working capital = current assets-current laibilities | |||||
149500 = current assets- 106800 | |||||
current assets = 256300 | |||||
total long term assets = total asset -current assets | |||||
total long term assets = 4114000-256300 | |||||
total long term assets = 3857700 | |||||
Option $ 3857700 is correct |
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