Answer:
Debt must increase by $100,000
Explanation:
The debt-equity ratio that shows how an organisation's asset is financed by a mixture of shareholders' equity and debt (loans). It can also be called the gearing or risk ratio of financing.
The formula for calculating the debt-equity ratio is total liabilities/shareholders' equity.
The question already states that the debt-equity ratio is 0.5
Therefore, if the company's total asset will increase by $300,000, it means the breakdown of the $300,000 is that debt will increase by $100,000 and equity will increase by $200,000.
How is this derived debt= $100,000, Equity = $200,000
= $100,000/$200,000= 0.5 which is the debt-equity ratio.
