Question
You are considering buying a company using leveraged buyout. The company is projected to have sales of 200 million in the first year after buyout.
You are considering buying a company using leveraged buyout. The company is projected to have sales of 200 million in the first year after buyout. The cost of sales and other administrative expenses are 50% of the sale. Depreciation and amortization are 10% of the sale. Tax rate is 40%. There is no change in net working capital and no capital expenditure you can foresee. You plan to borrow 750 million at interest rate of 6% per year and put 100 million of your own money as equity to buy the company.
The price-to-sales multiple that you are paying for this company is ____.
The price-to-EBITDA multiple that you are paying for this company is ___.
The net income of the company in the first year after buyout is ___million.
The cash flows generated in the first year is ___ million.
Assuming all cash flows are used to pay down debt after the first year, the interest expense in the second year is ____ million.
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