1. An equity investor is considering purchasing a company which has $575 of EBITDA for a 6x multiple. The equity sponsor is going to put in $1,438 of equity. How much debt is needed? What multiple of EBITDA is this debt? Assuming a 10% interest rate, what would interest coverage be after the acquisition?

2. A company with EBITDA of $1,250 is purchased for a 7x multiple, financed with $6,250 of debt. How much equity is used for the purchase? Assuming EBITDA drops to $900 and the company is still valued at 7x, how much is the equity worth?

3. In question #2 above, assume EBITDA falls to $800, and the company is still valued at 7x. What is the equity worth in this case? If the company were to file for bankruptcy, what could the debt hope to recover?