JPMorgan Deck
How would you estimate how much debt a company can raise? EBITDA is $150M, existing debt is $150M, and lenders will go to 4.0x total leverage at an 8% cost of debt.
Model answer
Two lenses, then cross-check. Lens one, leverage capacity: 4.0x x $150M EBITDA = $600M total debt capacity; minus $150M existing = $450M of incremental debt. Lens two, coverage cross-check: interest…
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