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Question
Using a modified discriminant function similar to Altman's, Burger Bank estimates the following coefficients for its portfolio of loans:
Z = 1.4X1 + 1.09X2 + 1.5X3
where X1 = debt to asset ratio; X2 = net income and X3 = dividend payout ratio.
Using Z = 1.682 as the cut-off rate, what should be the debt to asset ratio of the firm in order for the bank to approve the loan?
A. 40.0 percent.
B. 46.5 percent.
C. 51.5 percent.
D. 54.0 percent.
E. 65.0 percent.
Answer
This answer is hidden. It contains 97 characters.
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