Hutchinson Corporation has zero debt?it is financed only with common equity. Its total assets are $410,000. The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?
A. $155,800
B. $164,000
C. $172,200
D. $180,810
E. $189,851
Answer: B
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