Emma Corporation finances its operations with $5 million in stock and $4 million in bonds.If the firm issues $1 million in additional bonds and uses the proceeds to retire $1 million worth of equity.What will be the firm's new debt to equity ratio? (Assume zero taxes and perfect capital markets)
A) 1.25
B) 0.80
C) 0.800
D) 1.00
Correct Answer:
Verified
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