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Leveraged Buyouts: A Practical Introductory Guide to LBOs by David Pilger

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Chapter 9: Interest

Setting the Stage

Looking down our income statement, we can see that the next section is interest income and interest expense. This section is central to the leveraged buyout analysis, but before we are able to project these figures we must first know more information regarding the leverage or debt to be used in the contemplated transaction. We will be able to forecast interest income and interest expense projections once we have done some work on the cash and debt balances we expect to be carrying over the explicit forecast range. For now, we can simply set up the interest portion of the income statement by entering the formulas that will eventually provide us with pre-tax income. To do this, we begin in pre-tax income ...

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