Y, Inc. has no debt right now. You project that this company can generate EBIT of…

Y, Inc. has no debt right now. You project that this company can
generate EBIT of 8 million per year for the next few years. There
is no depreciation. You plan to attempt a leveraged buyout of this
company. Your plan is to operate the company for three years and
sell the company then. You think the company can be sold at price
to EBIT ratio of 9.5 three years from now. You plan to borrow 60
million in three-year interest only loan and putting 10 millions of
your own equity to buy the company. (Note that the loan is interest
only and you do not plan to retire any debt before you sell the
company. Your interest payment will remain the same for the three
years.) The interest rate on the loan is 10% and the tax rate is
40%.
1.    What will be the selling price of the
company in three years (in millions)?
2.    What is the cash flow to the equity
investor in the third year in millions (the final year of the
project, including sale proceeds and loan repayment)?
3.What is the rate of return to you as the equity investor (in
percentage)?