KMS corporation has assets of $500 million, $50 million of which are cash. It has debt of $200 million. If KMS repurchases $20 million of its stock: a. What changes will occur on its balance sheet? b. What will be its new leverage (debt to equity) ratio? Answer: Select the best answer from the following. (Answer "A", "B", "C", or "D".) A. Both the cash balance and shareholder equity will drop by $20 million. B. Both accounts receivable and shareholder equity will drop by $20 million. C. Both the cash balance and shareholder equity will increase by $20 million D. Debt will increase by $20 million and shareholder equity will decrease by $20 million. Answer: The new leverage ratio (debt to equity) after the repurchase is 1 %. (Round to two decimal places.)