A small airline recently sold to a private equity group for $145 million

Question: #1016

A small airline recently sold to a private equity group for $145 million. The airline has earned profits of $9 million last year. The new managers believe they can grow profits at 5% per year. The private equity group borrows money from wealthy individuals to invest in acquisitions. Because of the significant risk involved, lenders are promised a 12% return on their loans to the equity group. Is the purchase price of the new airline reasonable? Explain

Additional Requirements

Other Requirements: Please show work in excel file

Solution: #1020

A small airline recently sold to a private equity group for $145 million

airline 0.31.docx 17 KB