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A firm's market value of equity is $700,000.The firm's capital structure also consists of bonds with a face value of $200,000,an annual coupon rate of

A firm's market value of equity is $700,000.The firm's capital structure also consists of bonds with a face value of $200,000,an annual coupon rate of 3% p.a.,a current yield of 4% p.a., and a maturity date in five years.

What is the firm's debt ratio,based on market values?

a. 0.286

b. 0.273

c. 0.214

d.0.222

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