1.LTM (Last Twelve Months) is calculated as follows: a.Latest completed fiscal year results + Latest reported stub period results Same stub period results from one year ago b.Latest fiscal year results Latest reported stub period results + Same period results one year ago c.Latest completed fiscal year results d.None of the above

2.Non-equity claims that should be deducted from Enterprise Value to find Equity Value include all of the following EXCEPT:

a.Minority Interest

b.Preferred stock

c.Capitalized leases

d.All of the above

3.

On December 30, 2013:

Company Y trades at $10 per share

Enterprise Value / EBITDA multiple of 5.0x

Leverage ratio of 0.6x (Net debt/EBITDA)

2013 EBITDA = $2.0 billion

Assume no cash on company Ys balance sheet

On December 31, 2013:

Company Y undergoes an LBO and is recapitalized

The companys new leverage ratio becomes 5.0x

Financial sponsor exit is planned for Year 5. Assume that the EV/ EBITDA multiple at exit year is the same as the current multiple.

Required rate of return is 25%

Exit year EBITDA projected to be $3.0 billion

The companys year-end leverage ratio is 1.6x

What is the initial equity necessary to achieve the rate of return required by the financial sponsors?

a.$4.95 billion

b.$3.34 billion

c.$3.15 billion

d.$3.80 billion

4.

On December 30, 2013:

Company Y trades at $10 per share

Enterprise Value / EBITDA multiple of 5.0x

Leverage ratio of 0.6x (Net debt/EBITDA)

2013 EBITDA = $2.0 billion

Assume no cash on company Ys balance sheet

On December 31, 2013:

Company Y undergoes an LBO and is recapitalized

The companys new leverage ratio becomes 5.0x

Financial sponsor exit is planned for Year 5. Assume that the EV/ EBITDA multiple at exit year is the same as the current multiple.

Required rate of return is 25%

Exit year EBITDA projected to be $3.0 billion

The companys year-end leverage ratio is 1.6x

How much debt is paid down by the exit year (since the LBO announcement)?

a.$6.4 billion

b.$5.2 billion

c.$6.2 billion

d.$5.6 billion

5.

On December 30, 2013:

Company Y trades at $10 per share

Enterprise Value / EBITDA multiple of 5.0x

Leverage ratio of 0.6x (Net debt/EBITDA)

2013 EBITDA = $2.0 billion

Assume no cash on company Ys balance sheet

On December 31, 2013:

Company Y undergoes an LBO and is recapitalized

The companys new leverage ratio becomes 5.0x

Financial sponsor exit is planned for Year 5. Assume that the EV/ EBITDA multiple at exit year is the same as the current multiple.

Required rate of return is 25%

Exit year EBITDA projected to be $3.0 billion

The companys year-end leverage ratio is 1.6x

What is the initial Equity Value?

a.$9.0 billion

b.$8.8 billion

c.$7.6 billion

d.$8.0 billion

6.Which of the following is true about senior debt?

a.Has the least restrictive covenants because it is secured by the companys assets

b.Since it is secured by the companys assets, lenders prefer to have the debt outstanding over time in order to generate more interest

c.Usually uses PIK securities or come with warrants like mezzanine debt

d.None of the above

Under recapitalization accounting:

a.Goodwill is created

b.Returns to sponsors will be affected

c.The purchase price is reflected as a reduction to equity

d.None of the above