Barr Co. has total debt of $420,000 and equity of $700,000. Barr is seeking capital...
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Barr Co. has total debt of $420,000 and equity of $700,000. Barr is seeking capital to fund an expansion. Barr is planning to issue an additional $300,000 in common stock and is negotiating with a bank to borrow additional funds. The bank requires a debt-to-equity ratio of .75. What is the maximum additional amount Barr will be able to borrow? Select one:
a. $225,000
b. $330,000
c. $525,000
d. $750,000
I chose c, which was incorrect. Can you please show me how to get to the correct answer? Thank you
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