Hutchinson Corporation Has Zero Debt-It Is Financed Only with Common

question 42

Multiple Choice

Hutchinson Corporation has zero debt-it is financed only with common equity.Its total assets are $410,000.The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%,using the proceeds from the borrowing to buy back common stock at its book value.How much must the firm borrow to achieve the target debt ratio?

• A) $155,800
• B) $164,000
• C) $172,200
• D) $180,810
• E) $189,851

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