Economic Income valuation-Loan calculation

stands for in CFA institute L2 Curriculum Vol2, page 23 stand for in Schweser L2 Notes book1, page 34 __________________________________________________________________________ in table 30 Financial Statement, the loan(liability)=50% of firm market value. Why not 50% of firm’s asset. It’s hard to understand this point. The market value is different from asset. At year 0, company can borrow money to buy asset for the project, not buy the market value. there is a similar example, loan=50% of market value($522,906)=261,453 which is even more than year 0 initial investment $200,000. What’s the logic to assume loan=50% of market value?


This is an assumption stated in the problem, read it, use it and move on.