A PE firm has decided to take on $50 million in debt to finance the acquisition...

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A PE firm has decided to take on $50 million in debt to finance the acquisition of an unlevered target company. The PE firm plans to repay $5 million every year for the next 5 years. After Year 5 debt is expected to remain constant indefinitely. The cost of debt is 8% and the applicable tax rate is 28%. The table below shows the expected debt outstanding and interest expense (based on debt outstanding at the end of last year) [in millions]: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Debt Outst. $50 $45 $40 $35 $30 $25 Interest (8%) $4 $3.6 $3.2 $2.8 $2.4 If the unlevered value of the target company is $70 million, what is the maximum that the PE firm can offer for the target company (after taking on $50 million debt]? $78.41 million $73.25 million $70 million $76.54 million $75.0 million A PE firm has decided to take on $50 million in debt to finance the acquisition of an unlevered target company. The PE firm plans to repay $5 million every year for the next 5 years. After Year 5 debt is expected to remain constant indefinitely. The cost of debt is 8% and the applicable tax rate is 28%. The table below shows the expected debt outstanding and interest expense (based on debt outstanding at the end of last year) [in millions]: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Debt Outst. $50 $45 $40 $35 $30 $25 Interest (8%) $4 $3.6 $3.2 $2.8 $2.4 If the unlevered value of the target company is $70 million, what is the maximum that the PE firm can offer for the target company (after taking on $50 million debt]? $78.41 million $73.25 million $70 million $76.54 million $75.0 million