Need Some Help

Studying technicals and came across these questions and have no idea how to answer them. Can someone give their thoughts as to how to answer these?

1. You are given 2 companies with enterprise values of 100 each. Company A is financed by 50% debt and 50% stock while Company B is financed all through stock. The next day, their enterprise values shoot up to 200 for each. Which company would you rather own stock in and why?

2. Let’s say a company has 50m EBITDA with 4x EV/EBITDA and bank debt of 100m and high yield debt of 200m. How much would investors pay for the high yield debt?

4 Comments
 

I am interested too. Wouldn't the first one be 100% stock? Idk maybe someone who knows more than me could elaborate. Garbage threads get responses in seconds and no one seems to have an answer when there are genuine questions.

 
  1. EV = 50 x 4 = 200m; Bank debt has highest priority and will receive all of the 100m loan, leaving 100m in value left; 100m in value left for 200m of high yield debt = 100 / 200 = .50 trading price of HY
 
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