Happy Times, Inc., wants to expand its party stores into the Southeast. In order to establish an
Question:
a. Based on these estimates, what is the maximum share price that Happy Times should be willing to pay for Joe’s?
b. After examining your analysis, the CFO of Happy Times is uncomfortable using the perpetual growth rate in cash flows. Instead, she feels that the terminal value should be estimated using the EV/EBITDA multiple. If the appropriate EV/EBITDA multiple is 8, what is your new estimate of the maximum share price for the purchase?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Question Posted: