Question

You have one LAST attempt left of this question for credit. Massachusetts Burger is a national chain that, because of its success, has decided to expand.MassBurger, as it's also known, is currently unlevered and has assets valued at 3000000. Suppose the size of the assets increases by a tactor of 4.36 (for example, if the factor is 10, then it means the amount of assets will be 10 times as large), with all of the expansion funds coming trom debt capital. What must the percentage fall in the assets be before all the equity is wiped out? Answer Place your answer in percentage form and wo decimal places. For example if your answer is tele point seven fve percent then submit as our answer %

Answer 1

We see that to wipe out the entire equity Percentage fall in assets should be =1-(4.36-1)/4.36=22.94%