Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please I need solution to this question The free cash flow of a given project over a period of 10 years, from the total investment
please I need solution to this question
The free cash flow of a given project over a period of 10 years, from the total investment (banker's) perspective is given as below. In order to obtain the cash available to equity- holders work out the free cash flow waterfall statement based on the following capital structure. Regarding the cash sweep convention, the assumption is to allocate whatever cash remains after paying the debt service in each year; to prepay the outstanding principal of the highest rank debt outstanding in the following year. Year 1 2 3 4 5 6 7 8 9 10 Free cash flow (cash available for senior debt) -200 65 67 69 72 74 77 80 85 100 Senoir Debt: 100 Million USD loan with a 5 year tenure, dispersed in year 1. Bearing 8% interest with fixed equal principal annual repayments over 5 years. Mezzanine Debt: 90 Million USD loan with a 6 year tenure, dispersed in year 1. Bearing 12% interest with fixed equal principal annual repayments over 6 years. 10 Million USD with a target rate of return of 17 percent. Equity: Please also calculate the annual debt service coverage ratios for the senior and mezzanine debt over the whole period and interpret the numbers you find. The free cash flow of a given project over a period of 10 years, from the total investment (banker's) perspective is given as below. In order to obtain the cash available to equity- holders work out the free cash flow waterfall statement based on the following capital structure. Regarding the cash sweep convention, the assumption is to allocate whatever cash remains after paying the debt service in each year; to prepay the outstanding principal of the highest rank debt outstanding in the following year. Year 1 2 3 4 5 6 7 8 9 10 Free cash flow (cash available for senior debt) -200 65 67 69 72 74 77 80 85 100 Senoir Debt: 100 Million USD loan with a 5 year tenure, dispersed in year 1. Bearing 8% interest with fixed equal principal annual repayments over 5 years. Mezzanine Debt: 90 Million USD loan with a 6 year tenure, dispersed in year 1. Bearing 12% interest with fixed equal principal annual repayments over 6 years. 10 Million USD with a target rate of return of 17 percent. Equity: Please also calculate the annual debt service coverage ratios for the senior and mezzanine debt over the whole period and interpret the numbers you findStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started