Adventis Level 2 Questions 2024 With Updated Answers

an investor puts $50 million of equity capital into a business in exchange for 90% equity stake. Three years later, the business is sold for 90 million transaction value. When its sold, it has $15 million of debt and $3 million of cash. What is the annualized return to the investor - right answer--12.0% an investor puts $50 million of equity capital into a business in exchange for 90% equity stake. Three years later, the business is sold for 90 million transaction value. When its sold, it has $10 million of debt and $3 million of cash. What is the cash on cash multiple to the investor? - right answer--1.9x an investor puts $40 million of equity capital into a business in exchange for 90% equity stake. Three years later, the business is sold for 90 million transaction value. When its sold, it has $10 million of debt and $3 million of cash. What is the purchase price of the deal at exit? - right answer--$83 Which of the following statements is false? - right answer--subordinated debt holders are only paid after equity holders are paid All else being equal, what happens to investor returns if interest expense on debt increases? - right answer--investor returns increase if a company is announced to be sold for a transaction value of $15 million and it has $2.5million od debt and $2.0 million of cash, what is the purchase price of the company? - right answer--$14.5 million which of the following statements is false in regards to calculating terminal value - right answer--unlike the perpetuity method, in the exit multiple to terminal value is not discounted back five years to arrive at the present value what is the calculation for present value - right answer--future/(1+discount rate)^term a security pays $100 in 3 years and you are required a minimum rate of return of 12% annually. What is the maximum amount you will purchase this security for today? - right answer--$71.18 You receive a loan for $1000. The loan accumulates interest at a rate of 6.5%. How much will interest will you owe in 4 years? - right answer--$286.47