Question: Bagel Corp currently has $ 8 5 5 , 0 0 0 of common equity and no debt. The new CFO wants to employ enough

Bagel Corp currently has $855,000 of common equity and no debt. The new CFO wants to employ enough debt to raise the debt-to-equity 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) $342,000
b. $244,286
c. $513,000
d. $610,714
e. $318,060
Bagel Corp currently has $855,000 of common equity and no debt.

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