1. ABC Company has $720,000 of assets, and it uses no debt: it is financed only with common equity. The new CFO wants to employ enough debt to raise the debt/assets 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. $273,600

b. $288,000

c. $302,400

d. $317,520

e. $333,396