Numerical Reasoning Test Question 4

QUESTION:

If every cash (that is, cash only) deal were funded by the acquiring company taking on debt worth 50% of whatever they paid for the deal, what was the total debt raised in the sample?

a) $108M
b) $96M
c) $108
d) $118M

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Correct Answer: a)

EXPLANATION:

There were three cash only deals. First, find the amount the acquirer paid in each of those deals:

Jimmy’s Label paid the following for Porteck:

15*(1+0.28)*51%=$9.792M

Colson Inc. paid the following for Gemini:

95*(1+0.01)*5%=$4.7975M

Pospad paid the following for Event Book:

129*(1+0.56)*100%=$201.24M

Sum the amounts paid for the transactions:

9.792+4.7975+201.24=$215.8M

Finally, find the debt raised:

215.8*50%=$107.9148M

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Numerical Reasoning Test Question 4