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A firm has assets of $250 million, of which $25 million is cash. It has total debt of $100 million (there are no other liabilities).

A firm has assets of $250 million, of which $25 million is cash. It has total debt of $100 million (there are no other liabilities). If the firm were to repurchase $10 million of its stock with cash, what would its new debt-to-equity ratio be?

a. 71.4%

b. 28.6%

c. 80%

d. 20%

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