D/E

A company has debt equal to $35 million and total assets of $105 million. This company makes a commitment to acquire raw materials over the next 3 years by making annual purchases of $5 million which have a present value of $12 million. For purposes of analysis, the best estimate of the debt-to-equity ratio after the appropriate analyst adjustment of the balance sheet is: A. 0.343. B. 0.500. C. 0.671. Ans: C Can someone show the working please? Thanks

A=D+E E=105-35=70 Add 12 to both D and A A=117 D=47 E=70 47/70=.671

This company makes a commitment to acquire raw materials over the next 3 years by making annual purchases of $5 million which have a present value of $12 million. Is the proper classification of this transaction a take or pay contract?

I believe so