Assume that a project's expected return is $180 million in 5 years for an initial investment of $100 million? How much debt should this project take to get a 10% ROI after debt payback? Assume 10% interest rate?

Sir,the answer calculated does not match with any of the options mentioned.Kindly explain

Sir,the answer calculated does not match with any of the options mentioned.Kindly explain

Apr 14 2013 08:09 PM

The correct question is "how much dent should the project take to get 110% ROI" and not 10%. We fixed this a few days back. Does it still show as 10%?

So if you invested $100mn (50 equity + 50 debt) and got back $180mn.

Then ROI = (180'returns'-50'debt'-25'interest'-50'equity)/50'equity' = 110%

Apr 22 2013 01:16 PM
So if you invested $100mn (50 equity + 50 debt) and got back $180mn.

Then ROI = (180'returns'-50'debt'-25'interest'-50'equity)/50'equity' = 110%