Answer to Question #8555 in Finance for cathy

Question

Suppose a new company decides to raise a total of $200 million, with$100million as common equity and $100 million as long-term debt. The debt can be mortgage bonds or debentures, but by an iron-clad provision in its chapter, the company can never raise additional debt beyond the orginal $100 million. Given these conditions, which of the follwing statement is correct.