Beranek Corp Has $720,000 of Assets, and It Uses No

Multiple Choice

Beranek Corp has $720,000 of assets, and it uses no debt--it is financed only with common equity. The new CFO wants to employ enough debt to raise the debt/assets 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) $273,600
B) $288,000
C) $302,400
D) $317,520
E) $333,396