The extremely high leverage associated with leveraged buyouts significantly increases the riskiness of the cash flows available to equity investors as a result of the increase in fixed interest and principal repayments that must be made to lenders.Consequently,the cost of equity should be adjusted for the increased leverage of the firm.
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Q4: Some analysts suggest that the problem of
Q5: For simplicity,the market value of common equity
Q6: The deal makes sense to lenders and
Q7: An LBO transaction makes sense from the
Q8: Using the adjusted present value method to
Q10: Projecting future annual debt-to-equity ratios depends on
Q11: An LBO can be valued from the
Q12: As the LBO's extremely high debt level
Q13: If the debt-to-equity ratio is expected to
Q14: It is impossible for a leveraged buyout
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