Beranek Corp has $855,000 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 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. $287,280
B. $342,000
C. $318,060
D. $403,560
E. $277,020
Answer: B
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