Answer questions 28-30 based on the following information:

2017 2020

EBITDA 900 1100

28. Assume that in 2017 the company was purchased for an 8x multiple, using $2400 of debt. Assume that in 2020 the company is sold for an 8x multiple, and there was still $2,400 of debt outstanding when the company was sold. What is the equity return?

29. Now assume that the company was purchased for an 8x multiple in 2017, but in this case $4,500 of debt was used. Assume that in 2020 the company is sold for an 8x multiple, and there is still $4,500 of debt outstanding when the company is sold. What is the equity return?

30. Explain why the equity returns in 28 and 29 above are different. What impact did financial leverage have on equity returns?