Question: Alpha Corp. is prohibited from issuing more senior debt unless net tangible assets exceed 200% of senior debt. Currently the company has outstanding $100 million

Alpha Corp. is prohibited from issuing more senior debt unless net tangible assets exceed 200% of senior debt. Currently the company has outstanding $100 million of senior debt and has net tangible assets of $250 million. How much more senior debt can Alpha Corp. issue?

This is problem 20, chapter 24 of Principles of Corporate Finance 12th edition.

WHY do we divide 50 million by 2? Why is the answer $25 million and not $50 million?

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