A question from the quiz.



0
If you took $20 million as debt to fund a $200 million project. Assuming 10% interest on the debt and returns of $500 million in 5 years. What is your ROI?
Answer given is 61%.

My solution:

Debt= $20 million
Own investment = $180 million

Interest @ 10% for 5 years = $10 million.
Return = 500-20(debt)-10(interest)= $470 million.

ROI= 470/180. This is not equal to 61 %. Please tell me what am I doing wrong.

1 Answer(s)


0

In this question Debt is 20 million and interest 10% so after 5 year you have to return 30 million....if expected return after 5 years is 500 million then left over is 470 million and your investment is 180 million so ROI = 470/180=261%

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