Joe Bellino, a hotel investor is in the process of purchasing Hilton Hotel Inc. Hilton Hotel Inc. operates two hotels in NYC with a total of 800 rooms. He is anticipated to complete the necessary renovations on these properties by December 31, 2020 and open doors for Business on January 1st 2021. The estimated total cost of both properties is $300 million, plus additional $30 million for renovations. Hilton estimated 2019 EBITDA of $40 million and outstanding debt of $40 million.

Joe needs capital to purchase and renovate the two properties as well as refinance its current debt outstanding. Jack will invest $90 million of equity. He received an approval for the bank loan for 3x 2019 EBITDA and the rest of the financing will be paid in corporate bonds. The pricing is a bank loan at 5% fixed rate interest, corporate bonds at a 8% fixed ratr and the equity expected return is calculated based on CAPM with risk free rate of 1.0%, beta of 2x and equity market return of 10%.

Please provide formulas based on the image.

Transcribed image text: Transaction Uses Amount write the whole number (i.e. 200,000,000 for $200 million) TAX RATE = 22.0% Transaction Sources Amount ($ million) % Capital Interest /Expected Return Interest /Expected Return After Tax WACC % Bank Loan Corporate Bonds Equity Total