hard · Principles of Finance time-value-of-money
A financial sponsor performs an LBO of a company for $1,000 million (10x EBITDA) using $600 million of debt and $400 million of equity. After 5 years, EBITDA has grown to $150 million, and debt has been paid down to $300 million.
If the exit multiple is still 10x, what is the Multiple of Invested Capital (MOIC)?
- 1.5x
- 2.25x
- 3.75x
- 3.0x
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