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Sir, in that question after adding $99m of sale of assets to the proportion of assets remaining why in Total additional funds available to Nubo Co for new investments $99m further added.
the published answer is mentioned below;
Proportion of assets remaining within Nubo Co
30% x ($550m + $122m) = $201·6m
Add extra cash generated from the sale of $99m
Maximum debt capacity = $300·6mTotal additional funds available to Nubo Co for new investments = $300·6m + $99m = $399·6m
Sir , kindly clarify.
The amount they are able to borrow is 100% of the total asset value.
The total asset value is 300.6 and so this is how much they can borrow (and is available for investing).
In addition they do have cash which is available for investing (and is included in the total asset value).So they are able to invest both the amount they can borrow, plus the cash they have available.
Hi, This is probably a very silly question but are you able to tell me where the 99m cash comes from in the solution?
If the supermarkets are sold as a going concern then the value is estimated to be $581m.
The proceeds are used to pay off all the liabilities, which are $482m.
That leaves 581 – 482 = $99m
Hi Sir, Kindly clarify why we have to add $99M again while calculating the total additional funds available for Nubo?
Isnt the $99M included in the total asset value of $300.6M (as that is $201.6+$99.00)The amount they are able to borrow is 100% of the total asset value.
The total asset value is 300.6 and so this is how much they can borrow (and is available for investing).
In addition they do have cash which is available for investing (and is included in the total asset value).So they are able to invest both the amount they can borrow, plus the cash they have available.
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