Question
3) Using the information below, determine the size of the term loan B and calculate the sources and use of funds, respectively. ($ in millions)
3) Using the information below, determine the size of the term loan B and calculate the sources and use of funds, respectively.
($ in millions) Sources of Funds Uses of Funds Term Loan B $_______ Purchase ValueCo Equity $825.0 Senior Subordinated Notes $300.0 Repay Existing Debt $ 300.0 Equity Contribution $385.0 Financing Fees $ 20.0 Cash on Hand $ 25.0 Other Fees and Expenses $ 15.0 Total Sources of Funds $_____ Total Uses of Funds $_____
| a. | $320.0 million; $1,425.0 million | |
| b. | $450.0 million; $1,160.0 million | |
| c. | $300.0 million; $1,000.0 million | |
| d. | Cannot be determined |
7) Which of the following is a reasonable total leverage ratio for an LBO under normal market conditions?
| a. | 5.0x net income | |
| b. | 3.0x EBITDA | |
| c. | 1.0x sales | |
| d. | 5.0x EBITDA |
9) What IRR threshold has historically served as the standard for sponsors in considering an LBO?
| a. | 40% | |
| b. | 20% | |
| c. | 10% | |
| d. | 5% |
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Public Finance And Public Policy
Authors: Arye L. Hillman
2nd Edition
0521738059, 978-0521738057
