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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4451
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Hutchinson Corporation has zero debt¾it is financed only with

Customer Question

Hutchinson Corporation has zero debt¾it 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?
Submitted: 5 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 months ago.
Dear Friend,Hello and welcome. Thank you for providing an opportunity to assist you. Total assets $410,000 Target debt ratio 40% Debt to achieve target ratio = amount borrowed $164,000 They will need to borrow $164,000 to achieve the target debt ratio. I am sure this would help. You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question. Warm Regards,