What is the interest expense in the first year after buyout

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You are considering buying a company using leveraged buyout. The company is projected to have sales of 500 million each year in the three years after buyout. The cost of sales and other administrative expenses are 60% of the sale. Depreciation and amortization are 5% of the sale. Tax rate is 40%. Suppose that the change in net working capital and capital expenditure each year is zero. If you borrow 1.5 billion at interest rate of 8% per year, and you use all the cash flow to repay debt.

1) What is the EBITDA in the first year after the buyout?

2) What is the interest expense in the first year after the buyout?

Reference no: EM131929249

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