Hutchinson Corporation has zero debt-it is financed only with common equity.Its total assets are $410,000.The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%,using the proceeds from the borrowing to buy back common stock at its book value.How much must the firm borrow to achieve the target debt ratio?
A) $155,800
B) $164,000
C) $172,200
D) $180,810
E) $189,851

Question

Quizplus · Accepted Answer

Tatl? as5ets                                              $410,000
Tarret debt ratio                                            $40 \%$
Debt to acheve target ratid = manst borrowed                  $164,000

Hutchinson Corporation Has Zero Debt-It Is Financed Only with Common