medium · Investment Banking
A company has $100 million in Net Operating Losses (NOLs). If the tax rate is 25% and the firm can use $20 million of NOLs per year, what is the impact on an LBO model's Debt Schedule?
- It increases the interest rate that lenders charge.
- It increases the cash available for optional debt repayment.
- It is ignored because LBOs focus exclusively on EBITDA figures.
- It reduces the Total Debt required to fund the leveraged buyout price.
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