Question 3 asks for the number of futures contracts Austin needs to sell to eliminate all interest rate risk in the portfolio.
It uses $1 billion as the value of the portfolio and Pcd (96,500) and CTD conversion factor (1.17) for the formula. Also, it lists the futures price of 100,000.

Why we don’t need to use $1.25 billion as the value of the portfolio since we are borrowing another 25%?

Why can’t we use the futures price directly $100,000? (answer uses 96,500 and 1.17 and 96,500/1.17 which is not equal to $100,000)
Thank you!