How much must the firm borrow to achieve the target

Reference no: EM13299987

Beranek Corp has $665,000 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?

Answer

a. $250,040
b. $252,700
c. $303,240
d. $324,520
e. $266,000

Reference no: EM13299987

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