{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture7 - when to use APV


Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ll the debt inherited from the buying shell company. Usually, the new entity quickly repays its debt from cash flows, until within a few years it reaches a “target capital structure” that is chosen for the company. 6 Time-Pattern of Debt-Ratio B/S Target 0 1 2 3 4 5 Year 7 Acquisition Details PJ has unlevered perpetual cash flows of $15. PJ has book debt­to­book equity ratio of 1/3 and KKR experts believe that this is its “target capital structure”. New management plans to repay the buyout debt quickly, and reach a debt­equity ratio of 1/3 by th...
View Full Document

{[ snackBarMessage ]}