Buyer is acquiring Target in a part cash part stock transaction.

Calculate proforma debt / Forward Year 1 (FWY 1) EBITDA ratio for the following transaction.

Assume the target's debt is not refinanced.

Assume no fees.

a) 5.27 x

b) 5.13 x

c) 2.73 x

d) 2.54 x

*Answer is 5.27x - please provide explanation.

Buyer Target Share price 10.00 15.00 30.0% 1000.0 500.0 Acquisition premium Diluted shares outstanding Total debt outstanding % equity financing 6000.0 350.0 30.0% Forward Year 1 (FWY 1) EBITDA 2000.0 500.0