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Hello Tutor,
Estimate the additional cash and debt funds which could be available to the new downsized co.
Extra Cash = 99
Max debt capacity = 201.6 + 99 = $300.6 mOne thing i can’t understand is how the examiner gets total additional funds available to Nubo Co for new Investments = 300.6 m + 99 m = 399.6 m
I would say only 300.6 m.
Why add 99 m again?It is added the first time just to calculate the maximum debt capacity, which is 100% of the total assets. Since the total assets (including the cash) are equal to 300.6, this is the amount they can borrow.
So they borrow 300.6 and also have the cash of 99 available as well 🙂
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