Solving for Values of Debt and Equity

Question

Value of equity: D/E = 1.5. As value of debt = $1.05 million, the value of equity must be 2/3*1.05 million = $700,000

 

In this solution, how was 2/3 found to solve for equity?

Answer 1

Another way of writing D/E = 1.5 is as follows

D/ E = 3/2

Changing this equation to bring E on one side and all other things on the other 

E = D*2 / 3

that way 2/3 is calculated .

There are limited formatting options while answering question or i would have made it look more understandable