Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I want to calculate the Debt Ratio of this problem, using the total debt / own capital method. I know that option A own capital
I want to calculate the Debt Ratio of this problem, using the total debt / own capital method. I know that option A own capital is 63,000 euros and option B is 18,000 euros. In the following table, where do I take the total debt figure from?
Option a (70% own financing, 30% other financing) 90,000.00 euros Option b (20% own financing, 80% other financing) 90,000.00 euros Machine cost 70%. 63,000.00 euros 20%. 18,000.00 euros Own Financing Other Financing 30%. 27,000.00 euros 80%. 72,000.00 euros (b) Cost of finance 1,755.00 euros 3,960.00 euros (a) Returns @ 20% 18,000.00 euros 18,000.00 euros 16,245.00 euros 14,040.00 euros (a-b) Profit after cost of financing Income Tax 25% 4,061.25 euros 3,510.00 euros Returns after tax 12,183.75 euros 10,530.00 euros ROI 19.34% 58.50%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started