What amount of subsidized debt they can get

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Question - The Alpha Company plans to establish a subsidiary in Hungary to manufacture and sell fashion wristwatches. Alpha has total assets of $72 million, of which $43 million is equity financed. The remainder is financed with debt. Alpha considered its current capital structure optimal. The construction cost of the Hungarian facility in forints is estimated at HUF2,127,000,000. The Hungarian government is offering a below-market borrowing rate. Alpha wonders what amount of subsidized debt they can get from the government. Estimate the amount they can use if they want to keep the same capital structure.

Reference no: EM133029639

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