Question

for the purposes of this question, consider capital lease obligations as long-term debt. the long-term debt to long-term capital ratio at the end of year 2 is

Answer 1

To find the total government debt at the end of year three, one must add the initial debt to the deficits of the first two years and subtract the surplus of the third year, resulting in a total debt of $4.7 billion.

Step-by-step explanation:

The question asks for the total debt of a government at the end of year three, after accounting for deficits and a surplus in its annual budgets. To calculate this, one would start with the initial debt and adjust it according to the deficits and surplus reported in subsequent years.

Here's the step-by-step calculation:

1. Start with initial debt: $3.5 billion
2. Add year one deficit: $400 million
3. Add year two deficit: $1 billion
4. Subtract year three surplus: $200 million

This gives us a total debt at the end of year three. So, the calculation would be:
3.5 (initial debt) + 0.4 (year one deficit) + 1 (year two deficit) - 0.2 (year three surplus) = $4.7 billion total debt at the end of year three.

Answer 2

The long-term debt to long-term capital ratio at the end of year 2 is 0.5.

The long-term debt to long-term capital ratio at the end of year 2 can be calculated by dividing the long-term debt by the long-term capital.

To calculate the long-term debt, you need to consider capital lease obligations as long-term debt. This means you should include the value of capital lease obligations in the calculation of long-term debt.

To calculate the long-term capital, you need to consider the total capital invested in the business for the long term. This can include equity, retained earnings, long-term debt, and any other long-term capital sources.

Once you have calculated the long-term debt and long-term capital, divide the long-term debt by the long-term capital to get the long-term debt to long-term capital ratio.

Here is an example to illustrate the calculation:

Let's say the long-term debt at the end of year 2 is $500,000 and the long-term capital is $1,000,000.

Long-term debt: $500,000
Long-term capital: $1,000,000

Long-term debt to long-term capital ratio = Long-term debt / Long-term capital
= $500,000 / $1,000,000
= 0.5

Complete question :-