The equity of a company is ₹15,00,000 and its debts are ₹5,00,000. What amount of additional long-term loan can the company take so that it maintains the debt-equity ratio at 0.5 : 1?

Correct option is C

Debt-Equity Ratio =
Total Debt /Total Equity =0.5:1
Given:
· Equity = ₹15,00,000
· Existing Debt = ₹5,00,000
· Let additional debt required = x
According to the required ratio:
(5,00,000+x)/15,00,000=0.5
Solving:
5,00,000+x=0.5×15,00,000 5,00,000+x=7,50,000 x=7,50,000-5,00,000=2,50,000
Thus, the company can raise ₹2,50,000 as additional long-term loan to maintain the debt-equity ratio of 0.5 : 1. Therefore, the correct answer is (c) ₹2,50,000.