How much must the firm borrow to achieve the target

Reference no: EM13257205

ABC Company has $720,000 of assets, and it uses no debt: it is financed only with common equity. The new CFO wants to employ enough debt to raise the debt/assets 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. $273,600
b. $288,000
c. $302,400
d. $317,520
e. $333,396

Reference no: EM13257205

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