QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

63. Rising Star Ltd. has $250 million in shareholders’ equity and $350 million in long-term debt. 60% of the long-term debt is convertible bonds. What would be its long-term debt-to-equity ratio if the bonds were converted? Assume the tax rate to be 30%. A. 0.30 B. 0.76 C. 1.40