Question 4. You are analyzing a potential buyout of Great Lakes Logistics Corp. The company had revenues last year of $145 million with an EBITDA of 15%, no debt and 20 million shares outstanding. Its tax rate is 30%.

a) If the companys shares are currently trading at P/E ratio of 15 and you can borrow debt of 5 times last years EBITDA, how much equity would be required (at a minimum) for a buyout of Great Lakes Logistics Corp. and what multiple of enterprise value to EBITDA would this represent? b) Assume that the companys EBITDA will grow annually by 8% for the next 5 years and that the company can be sold after the 5th year at the same EV/EBITDA multiple as calculated in the previous question, what enterprise value would this represent? c) If 10% of the initial debt used for the buyout is paid back during each of the 5 years, what is the value of the companys equity in the sale after the 5th year and what IRR would this represent for the equity investors?