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Business, 13.05.2021 23:30 patrickfryer240

Ballyhoo Inc., was taken private through an LBO transaction many years ago. The company is now carrying a considerable amount of debt in the form of a zero-coupon bond with a face value of $2.5B which needs to be repaid in two years. The estimated market value of the Ballyhoo underlying business is $2.0B, and the volatility of the underlying business is 30.0%. Using a risk-free rate of 1.5%: a. What is the equity worth in this business?
b. What if the value of the debt?
c. What is the debt-to-equity ratio of the firm?
d. What is the yield to maturity of the debt?

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Ballyhoo Inc., was taken private through an LBO transaction many years ago. The company is now carry...
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