13.11 You are considering whether to invest $10 million in the 5-year subordinated notes of HTF, Inc. on October 1, 2007. The annual coupon of these notes is 8%, and its principal is due at the end of the fifth year. In order to obtain an acceptable return you demand equity participation. HTF’s current revenue and EBITDA are $30 million and $5 million, respectively. The EBITDA margin is 20%, and future EBITDA is expected to equal 0.20

× Revenue − 1,000, with revenue growing at 12% per year during the following 5 years.

Fifth year net debt is projected at $15 million.