Beranek Corp Has $625,000 of Assets (Which Equal Total Invested

question 75

Multiple Choice

Beranek Corp has $625,000 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) $195,000
• B) $250,000
• C) $202,500
• D) $262,500
• E) $212,500

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