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The RRK buyout fund is considering an investment in a fertilizer distribution center. The stock currently trades at $21 per share with 150,800,000 shares
The RRK buyout fund is considering an investment in a fertilizer distribution center. The stock currently trades at $21 per share with 150,800,000 shares outstanding. RRK offers $26 per share, 75% of which is funded by high-yield debt securities. The fund believes it can work with management to grow the firm at a rate of about 5% while also retiring half of the high-yield debt by an expected exit in year 6, reinvesting any profit in growth and debt reduction. What is the expected IRR of this investment? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. IRR 38.15%
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Quantitative Analysis for Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Ha
12th edition
133507335, 978-0133507331
