Today a company is worth $100m, it has $80m of debt and $20m of equity. Next year, the Company is worth $200m. How much are the debt and equity worth then?
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Assuming no pay down of the debt, equity is the variable piece of the equation - debt remains at $80mm and equity grows to $120mm.
would there be any other scenarios?
Without any additional information/datapoints given, no, there’s nothing else to work with due to the question’s simplicity.
If given this in a live interview, take the information you’re given and then you could mention what factors could change the answer, I.e “Assuming no pay down of principal, the debt would remain at $80mm and the equity would grow to $120mm. However, any debt pay down or new issuance could change the value of debt vs equity in a company worth $200mm.” The interviewer could then give you the actual numbers to work with if they wanted.
How do I invest in this company
With Grant Cardone :)
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