Comparable Transaction Method:

$2.$ Frontend Hardware Inc. $($FHI$)$ is evaluating the possibility of acquiring Backfire Software Inc. $($BSI$).$ BSI had sales of $\backslash (\backslash$$ $1\backslash )$ billion, EBITDA of $\backslash (\backslash$$ $100\backslash )$ million, and net income of $\backslash (\backslash$$ $20\backslash )$ million. On the balance sheet, cash is $\backslash (\backslash$$ $80\backslash )$ million, debt is $\backslash (\backslash$$ $300\backslash )$ million, and $100$ million shares are outstanding at the end of FY$2024.$ The table below shows the stock prices and multiples for comparable transactions in the software industry.Date EffectiveImplied Enterprise Value $(\backslash$$ million$)$EV$/$ EBITDA

What would be the maximum price FHI would offer for BSI's equity? $(10$ points$)$

LBO:

$3.$ PQR Capital is a private equity fund that would like to acquire Gonzalez Foods Inc. $($GFI$)$ through a leveraged buyout $($LBO$).$ The following is key financial information on GFI.

$-$ Cost of Debt $\backslash (=8\backslash \%\backslash )$

$-$ Cost of Equity $\backslash (=10\mathrm{.}40\backslash \%\backslash )$

$-$ Unlevered Cost of Equity $\backslash (=10\mathrm{.}00\backslash \%\backslash )$

$-$ WACC $=9\mathrm{.}58\backslash \%$

$-$ No$.$ of $($Target$)$ Shares $($million$)\backslash (=100\backslash )$

$-$ Long term growth rate $\backslash (=3\backslash \%\backslash )$

$-$ Cash $($billion$)\backslash (=1\backslash )$

$-$ Debt $\backslash ((\backslash )$ billion $\backslash ()=5\backslash )$

$-$ The debt for the target in the long term will be constant at $\backslash (\backslash$$ $5\backslash )$ billion.

$-$ The acquirer is willing to pay $\backslash (\backslash$$ $22\backslash )$ billion for the target's equity.

Determine the NPV of the deal. $(\backslash (\backslash$mathbf$\{15\}\backslash )$ points$)$