Question: ABC Corporation is purchasing DEF Corp using an asset swap so that it is tax-free to the owners of DEF Corp. DEF's EBITDA is

ABC Corporation is purchasing DEF Corp using an asset swap so that

ABC Corporation is purchasing DEF Corp using an asset swap so that it is tax-free to the owners of DEF Corp. DEF's EBITDA is 145.5 million and the price that ABC pays is 6 times EBITDA. If the owners of DEF Corp. have a tax rate of 20.5%, what is the equivalent price in millions if DEF is sold to a cash buyer?

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The price that ABC pays to DEF Corp is 6 times its EBITDA or 1455 million 6 873 mi... View full answer

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