In ch-10, pg-16, In project E, they mentioned "taking the total borrowing to £95000" How did we get 95000 over there???
Initially, 80000 was the outflow, and the inflow at the end of year 1 was 10000. The interest payment (against the loan) is of 5000, thus leaving him with 5000 in hand. He uses this 5000 as a sum for the investment at the start of year two. While, the sum needed for investment at the start of year 2 is 20000. Thus he takes a further loan of 15000 at the same rate of interest on the loan, that is, of 6.25% pa. In all he has a loan of 80000, and another 15000, which together becomes a loan of 95000. Hope this helps! Regards, Shyam
