Problem $8-13$

An all$-$equity financed company has a cost of capital of $10$ percent It owns one asset a mine capable of generating $$113$ million in free cash flow every year for five years, at which time it will be abandoned. A buyout firm proposes to purchase the company for $$410$ million financed with $$360$ million in compound interest debt to be repaid in five, equal, end$-$of year payments and carrying an interest rate of $9\mathrm{.}5$ percent.

a$.$ Calculate the annual debt$-$service payments required on the debt.

b$.$ Ignoring taxes, estimate the rate of return to the buyout firm on the acquisition after debt service.

Note: Round your answers to $1$ decimal place.

$\backslash$table$[[$a$.$ Annual debt service payment,,million$],[$b$.$ Rate of return,,$\%$