Roxy Corporation finances its operations with $20 million in stock and $30 million in bonds.If the firm issues $5 million in additional bonds and uses the proceeds to retire $5 million worth of equity.What will be the firm's new debt to equity ratio? (Assume zero taxes and perfect capital markets)
A) 0.75
B) 2.33
C) 0.86
D) 1.75
Correct Answer:
Verified
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