An all-equity financed company has a cost of capital of 10 percent. It owns one asset: a mine capable of generating $101 million in free cash flow every year for five years, at which time it will be abandoned. A buyout firm proposes to purchase the company for $360 million financed with $310 million in compound Interest debt to be repaid in five, equal, end-of-year payments and carrying an Interest rate of 5.5 percent. a. Calculate the annual debt-service payments required on the debt. b. Ignoring taxes, estimate the rate of return to the buyout firm on the acquisition after debt service. Note: Round your answers to 1 decimal place. a. Annual debt service payment b. Rate of return $ 72.6 million 96