Final answer:
The debt-to-value ratio for Acme Transmission Inc., with a debt-to-equity ratio of 0.75, is calculated to be approximately 0.429, making the correct response d. 0.429.
Step-by-step explanation:
To calculate the debt-to-value ratio, also known as the debt ratio, for Acme Transmission Inc., which has a debt-to-equity ratio of 0.75, we must understand the relationship between the two ratios. The debt ratio reflects the proportion of a company's total value that is financed by debt, while the debt-to-equity ratio compares the company's total debt to its shareholders' equity.
The formula for the debt-to-value ratio is: Debt Ratio = Total Debt / (Total Debt + Total Equity). Using the debt-to-equity ratio, we can express Total Equity as Total Debt / Debt-to-Equity Ratio. Plugging this into the formula, we get Debt Ratio = Total Debt / (Total Debt + (Total Debt / 0.75)).
This simplifies to Debt Ratio = 0.75 / (0.75 + 1), which results in 0.75 / 1.75. Calculating this, we get a debt-to-value ratio of approximately 0.429.
Therefore, the correct response is d. 0.429.