Hutchinson corporation has zero debt - it is financed only with common equity. its total assets are $330,000. 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? select the correct answer. a. $132,000.00 b. $131,986.90 c. $131,973.80 d. $131,960.70 e. $132,013.10

firm must borrow $132,000 to achieve the target debt ratio

correct option is a. $132,000.00

Explanation:

given data

Total Assets = $330,000

Desired Debt/Assets Ratio = 40%

to find out

firm borrow to achieve the target debt ratio

solution

we get here funds to be borrowed through debt

Value of Debt = Total Assets × Desired Debt/Assets Ratio   1

put here value we get  

Value of Debt = $330,000  × 40%

Value of Debt = $132,000

so that we can say firm must borrow $132,000 to achieve the target debt ratio

correct option is a. $132,000.00

the answer is either c or b, i cant be to sure tho.

answer; i believe the correct answer is energy star;