Beranek Corp has $665,000 of assets, and it uses no debt--it is financed only with common equity.

Question:

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 at its book value. How much must the firm borrow to achieve the target debt ratio?
a. $303,240
b. $266,000
c. $324,520
d. $250,040
e. $252,700

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...