Business, 02.06.2021 17:00 Zachary429
The private equity firm Clarence Partners is looking at a leveraged buyout
opportunity on the Longo Trattoria restaurant chain. Longo today (Year O) has a
capital structure of 75% equity, 25% debt. Its free cash flow last year (FCFO) was
$1 Million and it is expected to grow at constant rate of 8% per year. All its assets
are operating assets. Its WACC equals 14%. If Clarence invests in the deal (it
would acquire 100% of the company), it plans to exit at the end of Year 5, at
which point Longo's capital structure will be 90% equity and only 10% debt, and
its enterprise value (EV) will be estimated at 20 times its FCF in Year 5 (FCF5). All
interim cash flows will be used to pay down debt. Clarence has a minimum 35%
IRR hurdle rate.
1. What is Longo's value of equity today?
2. What will be Longo's value of equity at the end of Year 5?
3. How much equity should Clarence invest today if it is to meet exactly its
hurdle rate?
4. How much debt should Clarence contract, in addition to its equity
investment, in order to close the deal with Longo today?
Answers: 2
Business, 22.06.2019 01:00
Which type of data is generally stored in different file formats, such as text files, spreadsheets, and so on?
Answers: 3
Business, 22.06.2019 16:50
Arestaurant that creates a new type of sandwich is using (blank) as a method of competition.
Answers: 1
Business, 22.06.2019 22:30
Luggage world buys briefcases with an invoice date of september 28. the terms of sale are 2/10 eom. what is the net date for this invoice
Answers: 1
Business, 23.06.2019 01:30
Which of the following is considered part of a countryโs infrastructure?
Answers: 3
The private equity firm Clarence Partners is looking at a leveraged buyout
opportunity on the Longo...
French, 05.07.2019 18:00
Mathematics, 05.07.2019 18:00
Mathematics, 05.07.2019 18:00
Biology, 05.07.2019 18:00
Mathematics, 05.07.2019 18:00
History, 05.07.2019 18:00
Physics, 05.07.2019 18:00
Computers and Technology, 05.07.2019 18:00
Mathematics, 05.07.2019 18:00
History, 05.07.2019 18:00
Mathematics, 05.07.2019 18:00
Computers and Technology, 05.07.2019 18:00