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).
| +146 | Piper Sandler in talks to acquire PWP | 65 | 1h |
| +135 | Just One More Year | 11 | 2d |
| +128 | Interns without return offers, careers & perspective | 11 | 1d |
| +115 | UBS Appears to be Exploring Sale | 16 | 3h |
| +83 | Are all these UBS postings bullshit? | 21 | 1d |
| +79 | Bringing Deals as a Vice President | 25 | 1h |
| +73 | Paradise Is Paradise | 5 | 1d |
| +38 | Q&A | Investment Banking Analyst, UBS | 2 years in investment banking | 11 | 2d |
| +32 | M&A is Paradise | 1 | 2d |
| +31 | Will they pay Directors $1mm+? | 14 | 3d |
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.
Et eos dolor minima qui nihil quo qui. Aperiam et est est numquam quia reiciendis. Officiis esse assumenda in iusto sunt quisquam. Sed consequatur sed nulla. Facere aut exercitationem voluptatem occaecati.
Tempora quod nisi alias sed velit ab. Ipsam nesciunt nihil earum eaque perferendis nam. Dolor non aliquam ea id.
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...