Question 28 from Fin 3480 2016 Winter Midterm, it states debt as $650 million and Equity as $800 million, it then gives the levered value of the project as $300 million. It is asking what is the debt capacity for year 0. The answer I get is $134 million, as D/D+E = 650/1450 which equals approximately 44%, now 44% of 300 is 134, yet the answer key says it is only 100. Could you explain why that is the case. I know the formulas and it does not make any sense for the answer to be $100 million. Please let me know what find out.