question no 3 in quiz please share the calculation and expanation

I did'nt understood the question at all. Request you to please expain the calculation in detail.

1 Answer(s)


Let Debt be x
To pay the bank after 5 years= x+10% of x in 5 years
= 1.5x
Your equity investment= 100-x
Profit after 5 years= 180-1.5x-(100-x)
= 80-0.5x
Return%= (80-0.5x)/(100-x)
110/100= (80-0.5x)/(100-x)

x= 50
So, Debt= $50 million