Roxy Corporation Finances Its Operations with $20 Million in Stock

question 20

Multiple Choice

Roxy Corporation finances its operations with $20 million in stock and $30 million in bonds.If the firm issues $5 million in additional bonds and uses the proceeds to retire $5 million worth of equity.What will be the firm's new debt to equity ratio? (Assume zero taxes and perfect capital markets)

• A) 0.75
• B) 2.33
• C) 0.86
• D) 1.75

---

Definitions:

Captivity Narratives

Accounts written by colonists after their time in Indian captivity, often stressing the captive’s religious convictions.

Indian Society

is the societal structure and cultural patterns found within India, characterized by a rich diversity of religions, languages, customs, and traditions.

Economic Values

The principles or standards guiding the worth of activities, goods, services, and transactions in an economic system, often influencing production, distribution, and consumption decisions.

Economic Activity

Engagements and actions that involve the production, distribution, and consumption of goods and services within an economy.