Beranek Corp Has $855,000 of Assets (Which Equal Total Invested

question 132

Multiple Choice

Beranek Corp has $855,000 of assets (which equal total invested capital) ,and it uses no debt-it is financed only with common equity.The new CFO wants to employ enough debt to raise the total debt to total capital ratio to 40%,using the proceeds from borrowing to buy back common stock at its book value.How much must the firm borrow to achieve the target debt ratio?

• A) $287,280
• B) $342,000
• C) $318,060
• D) $403,560
• E) $277,020

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