20% gearing example
Investment
up by 10%
£100
invested
£120
total investment
£20
borrowed
(at 3% interest)
=
+
£120
£111.4
(+11.4%)
£20
£0.60
=
-
+
-
£12
total return/loss
interest on borrowed money 3%
borrowed
money
total investment
return/loss on investment 10%
Investment down by 10%
£120
£87.60
(-12.4%)
£20
£0.60
=
-
-
-
£12
£100
invested
£120
total investment
£20
borrowed
(20% geared)
Gearing
example
=
+
£120
+11.4%
£20
£0.60
=
-
+
-
£12
total return/loss
interest on borrowed money 3%
borrowed
money
total investment
return/loss on investment 10%
£120
-12.4%
£20
£0.60
=
-
-
-
£12
