What appears to be the targeted debt ratio of a firm that issues $15 million in bonds and $35 million in equity to finance its new capital projects?

Question

Quizplus · Accepted Answer

The targeted debt ratio is calculated as the amount of debt divided by the total financing. Here, it's $15 million in bonds (debt) divided by the total financing of $50 million ($15 million in bonds + $35 million in equity), which equals 0.30 or 30%.

What Appears to Be the Targeted Debt Ratio of a Firm