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Beranek Corp has $540,000 of assets (which equal total invested capital), and it uses no debt-it is financed only with common equity. The new CFO
Beranek Corp has $540,000 of assets (which equal total invested capital), and it uses no debt-it is financed only with common equity. The new CFO wants to employ enough debt to raise the total debt to total capital ratio to 30%, 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. $81,000 b. $415,385 c. $378,000 d. $702,000 e. $162,000
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