Explain the significant risk to the equity

Assignment Help Business Management

Reference no: EM13217755

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

Reference no: EM13217755

Questions Cloud

What is the momentum about the z axis : The weight W causes a tension of 100lb in cable CD. If d= 2ft, what is the momentum about the z axis due to the force exerted by the cable CD at point C?

What basic pattern do stars seem to trace out in our sky : What basic pattern do stars seem to trace out in our sky if you watch stars near the north celestial pole for a period of several hours?

Calculate the out of balance force : a gear of mass 2.5kg rotates ar 1500rpm.due to an error in manufacture the centre of gravity of the wheel is displaced 0.5mm from the axis of rotation. calculate the out of balance force.

What limits our ability to communicate in formal : There are so many ways that email and text communications can be viewed by others. You may write in all capital letters and be happy but the other person getting the message may think you are screaming at them.

Explain the significant risk to the equity : 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 rea..

Determine the missing property among p,t : Determine the missing property among P,T

Calculate spring stiffness : Calculate spring stiffness for which the oscillator becomes unstable (gravity in the negative y direction) verify with SW Simulation (study 1)

In early nineteenth-century america : In early nineteenth-century America...

How does ethics or morality influence the regulation : Are we capable of self-regulation? How does ethics or morality influence the regulation or deregulation process? Is government intrusion justified? Why or why not?

User Account

All Pages