question no 3 in quiz please share the calculation and expanation
1 Answer(s)
Naman
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
Mar 12 2014 07:09 PM
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