A Firm Has Assets of $240 Million, of Which $24

question 56

Multiple Choice

A firm has assets of $240 million, of which $24 million is cash. It has debt of $96 million. If the firm were to repurchase $9.6 million of its stock, what would its new debt-to-equity ratio be?

• A)142.86%
• B)71.43%
• C)35.71%
• D)85.71%

---

Definitions:

Imagery

Visual representations created by the mind or through various forms of art and media, used to convey messages, emotions, or information.

Commonsense Theories

Informal theories based on everyday experiences and observations, which people use to make sense of the world.

Systematic Research

An organized method of investigation aiming to discover new knowledge or understand existing knowledge better, based on systematic principles.

Previous Experiences

The set of events, activities, jobs, or tasks that an individual or organization has been involved with in the past, influencing current knowledge, skills, and perspectives.