Q17. (all figures in $m) PECo just bought out TargetCo for an enterprise value of $200. The transaction is financed with $115 debt. The cost of debt is 5% and the TargetCo's tax rate is 20%. The project FCF's for the next 3 years are as shown below. Year Target FCF (Sm) O A $60.77 O B. $62.43 Assume all of TargetCo's free cash flows will be applied towards debt paydown (after paying interest expenses) and debt paydown happens at the end of the year. What should be the ending debt balance in year 3? O C. $64.79 1 21 D. $66.39 2 22 3 23

Q17. (all figures in \$m) PECo just bought out TargetCo for an enterprise value of $200. The transaction is financed with $115 debt. The cost of debt is 5% and the TargetCo's tax rate is 20%. The project FCF's for the next 3 years are as shown below. Assume all of TargetCo's free cash flows will be applied towards debt paydown (after paying interest expenses) and debt paydown happens at the end of the year. What should be the ending debt balance in year 3 ? A. $60.77 B. $62.43 C. $64.79 D. $66.39 Q17. (all figures in \$m) PECo just bought out TargetCo for an enterprise value of $200. The transaction is financed with $115 debt. The cost of debt is 5% and the TargetCo's tax rate is 20%. The project FCF's for the next 3 years are as shown below. Assume all of TargetCo's free cash flows will be applied towards debt paydown (after paying interest expenses) and debt paydown happens at the end of the year. What should be the ending debt balance in year 3 ? A. $60.77 B. $62.43 C. $64.79 D. $66.39