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The split of Debt/Equity in Dec2015 exam question 1 was:
Assumptions and notes:
1 Debt/Equity 100·0%The solution shows 1/2 each. Is this not then 50% each. I think the question was misleading though.
Please assist what is the explanation of this split in 1/2 each if the question detail was:
Debt/Equity 100%.Please help.
Debt/Equity of 25% would mean something like Debt = 40, equity = 160. This is not the same as Debt/Total capital which would be 40/(40 + 160).
Therefore D/E 100% means 1:1
Thank you but I still cant get it. If the D/E was 50%. What would be the ratio? Wont it be 1:1 as well?
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