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Meyer Inc’s total invested capital is $676,000, and its total debt outstanding is $185,000. The new...

Meyer Inc’s total invested capital is $676,000, and its total debt outstanding is $185,000. The new CFO wants to establish a total debt to total capital ratio of 25%. The size of the firm will not change.

How much debt must the company add or subtract to achieve the target debt to capital ratio?

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Expert Solution

The company must subtract $16,000 to achive the target debt to capital ratio.

Total Debt outstanding must be $169,000 .

jeff jeffy answered 2 years ago
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