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Private Equity

Lecture 5-6: Deal Structuring (Financing)

Comprehensive exam-prep quiz covering leveraged finance: sources and uses of funds, management incentives and equity structuring, the leverage effect on EV and equity, key factors determining leverage, LBO debt structures, loan underwriting options, and loan agreements.

Question 18 of 50

In the lecture's DCF comparison, the leveraged case shows a higher Enterprise Value (€228.5m vs €221.8m). The source of this ~€6.7m uplift is:

Pick one: press 1-4 on your keyboard or click an option.
A

Higher EBITDA generated because of the debt

B

A higher EV/EBITDA exit multiple in the leveraged case

C

A lower discount rate applied to the leveraged cash flows

D

Lower cash tax payments due to the interest tax shield