I'm in a finance class, and have been working on this problem for probably 10 hours and still can't get it right. I've tried every possible option (it seems) and have read and re-read the chapter numerous times. Could somebody please help?
Carmen and Juan Montoya have just finished putting their three daughters through college. As empty-nesters they are considering purchasing a vacation home on a nearby lake because prices have dropped in recent years. The house might also serve as a retirement home once they retire in 12 years. The Montoyas' net worth is $285,000 including their home worth about $267,000 on which they currently owe $140,000 for their first mortgage. Their outstanding debts in addition to their mortgage include $12,300 on one car loan, $13,600 on a second car loan, and a $25,500 second mortgage on their home taken out to help pay for college expenses. What is their debt to equity ratio?
Read more: Debt-to-Equity ratio problem?
