Given a P/E of 10x, (1) what cost of debt is the minimum a company could use to accretively repurchase shares? (2) What about before tax cost of debt?
Would this be the correct way to think of it:
(1) seller's yield = inverse of P/E multiple = 1/10 = 10%; so would need cost of debt to be less than 10%
(2) would need cost of debt to be 10%(1-tax rate).
| +197 | Americas M&A League Table Q2 Updated | 79 | 3h |
| +131 | Restructuring: Anti-climactic Experience | 34 | 1d |
| +101 | IB Net Worth / Savings Check | 48 | 32m |
| +91 | Woman who emptied Knicks trashcan on street then stole it was DEI exec, worked at JPMorgan Chase | 24 | 13h |
| +80 | Stop sleeping on UBS - it’s pretty good | 26 | 2h |
| +52 | 2026 VAULT PRESTIGE RANKINGS | 29 | 1d |
| +39 | AI + Financial Modelling | 12 | 1d |
| +28 | Summer before college | 17 | 13h |
| +28 | Hardest interview experiences? | 16 | 22h |
| +26 | Current State of UBS in North America | 8 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Quibusdam doloribus laborum non at. Sint mollitia ipsa quisquam omnis aut. Et autem impedit aut eos est.
Est cupiditate ut quasi recusandae ut qui. Placeat ratione cupiditate et maxime dolor.
Dolor ut adipisci magnam excepturi nemo eligendi qui. Aut dolor atque et sed eligendi adipisci. Et aut mollitia distinctio. Quae autem modi quibusdam consequatur ipsa et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...