Beranek Corp Has $695,000 of Assets (Which Equal Total Invested

question 107

Multiple Choice

Beranek Corp has $695,000 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) $219,620
• B) $278,000
• C) $344,720
• D) $294,680
• E) $247,420

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Definitions:

Hypnosis

A trance-like state of focused attention and heightened suggestibility, with diminished peripheral awareness, often induced by a hypnotic suggestion.

Opiate Drugs

Substances derived from the opium poppy, such as morphine and heroin, that have powerful pain-relieving properties but are also highly addictive.

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Muscle Activity

The physiological processes of muscle contraction and relaxation, which enable movement and stabilization of the body.