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A private equity firm XYZ performs a leveraged buyout in which they purchase all equity and debt of company ABC for $ 5 billion. XYZ
A private equity firm XYZ performs a leveraged buyout in which they purchase all equity and debt of company ABC for $ billion. XYZ finances this purchase with $ billion of their own capital and borrows the remaining $ billion at interest. In one year unusually short for LBO XYZ pays off the debt and sells ABC for $ billion. Which of the follow is closest to XYZs return on their invested capital the $ billion Hint: draw a balance sheet.
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e None of the above
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