How to answer this technical I was asked at MM firm??
Had no idea how to answer and was stumped. My page was filled with numbers haha but I don't see how this is even possible without a calculator.
A PE firm buys a company for $500 with $300 debt and $200 equity. Tax rate is 50%. All LFCF goes to debt paydown. LFCFs are $90, $100, and $110. Exit EV is $500. An associate discovers SG&A was understated by the same fixed amount each year. After correction, MOIC drops from 2.5x to 2.2x. By how much was SG&A understated per year?
Anyone have any idea how to answer this without breaking out Excel??
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