Final answer:
To calculate the company's equity with a debt to equity ratio of 3 to 2 and a debt of $12 million, set up and solve a proportion, which results in an equity of $8 million.
Step-by-step explanation:
The student is asking about how to calculate equity given the debt to equity ratio and the amount of debt a company has. The company has a debt to equity ratio of 3 to 2, meaning for every 3 units of debt, there are 2 units of equity. Given that the debt is $12 million, we need to find the equivalent amount of equity by setting up a proportion: (Debt/Equity) = (3/2), which becomes (12 million/E) = (3/2). Solving for E, we find that the equity is $8 million.