You are a Vice President at a middle$-$market private equity firm. As you$$re reviewing an LBO model created by your Associate, you notice that Excel is flagging a circular reference. Which of the following situations is most likely to be the cause of the circular reference in the LBO model?

A$)$ The interest expense on the income statement is calculated based on the beginning debt balances, and this interest affects the net income and subsequently the cash flow available to pay down the current debt balance.

B$)$The purchase price is determined as a multiple of EBITDA, and this purchase price determines the amount of debt and equity used to fund the transaction.

C$)$The interest expense on the income statement is calculated based on the average beginning and ending period debt balances, and this interest affects the net income and subsequently the cash flow available to pay down the current debt balance.

D$)$ Depreciation is calculated as a percentage of the previous year's net property, plant, and equipment $($PP&E$)$ balance, and this depreciation is subtracted from the income statement to derive net income, which affects the cash flow available to pay down the current debt balance.