calculation of debt



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Sir,
i have solved this ques...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 110% ROI after debt payback? Assume 10% interest on the debt....my answer is different from the one that is given in the option. please give the correct method to solve this question.
thank you

1 Answer(s)


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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%