Question $7$ of $20$

This question uses the same data as previous questions, repeated below:

On December $31,2016,$ Silver Lane Partners, a private equity firm, acquired the operations of Baezmore Telecom $($BT$),$ a company with last twelve months $($LTM$)$ EBITDA of $$882\mathrm{.}7$ million at an enterprise value amounting to $8\mathrm{.}0$ times LTM EBITDA.

At the date of the acquisition, BT had noncontrolling interests with a market value of $$30\mathrm{.}0$ million, debt of $$50\mathrm{.}0$m$,$ equity investments valued at $$8\mathrm{.}0$m$,$ and cash of $$20\mathrm{.}0$m$.$

As part of the deal, all the noncontrolling interests were acquired $($at their market value$)$ and all existing debt was refinanced.

To fund the buyout, Silver Lane was able to secure $$250$ million in debt financing at a $10\mathrm{.}0\%$ rate of interest $($to be paid annually at each year end on the debt outstanding$).$

Transaction fees due in cash at the purchase date were $$3\mathrm{.}0$ million, while financing fees due in cash at purchase date totaled $$1\mathrm{.}0$ million.

None of BT$$s cash balances were used to fund the buyout.

Assuming the debt holders not only received the $10\%$ annual interest payments but also Options worth $$50$ million at Exit, what are the annual returns of the debt holders?

You may assume interest payments are made at the end of every year, and a $5$ year holding period for the debt holders.

Hint: Use the IRR function in Excel.