Question: Leverage and return on equity You are a private equity investor completing the acquisition of a company and are currently determining the optimal amount of

Leverage and return on equity
You are a private equity investor completing the acquisition of a company and are currently determining the optimal amount of debt and equity you will use to finance the company.
The purchase price of the company is $100. You plan to resell the company in a year. Its value then is uncertain, but you expect it to be $120.
After talking to prospective debt investors and analyzing the risk of the company's assets and cash flow you will use to repay them, you have summarized your debt options as:
\table[[,Option #1 Option #2 Option #3],[Debt amount,$50,$75,$90
 Leverage and return on equity You are a private equity investor

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