1. A corporation is expected to generate the following free cash flows over the next five years:

Year 1 54.6 FCF ($million)

Year 2 66.7 FCF ($ million)

Year 3 79.3 FCF ($ million)

Year 4 74.8 FCF ($ million)

Year 5 81.1 FCF ($ million)

a. estimate the enterprise value of the corporation in $ million, round to 2 decimals

b. if the corporation has no excess cash, debt of $281 million, and 44 million shares outstanding, estimate its share price

2.Suppose R Corp has earnings per share of $2.42 and EBITDA of $29.9 million. The firm also has 5.1 million shares outstanding and debt of $135 million (net of cash). You believe J Corp is comparable to R Corp in terms of its underlying business, but J Corp has no debt. If J Corp has a P/E of 13.4 and an enterprise value to EBITDA multiple of 7.4, estimate the Enterprise Value of R Corp by using both multiples. Which estimate is likely to be more accurate?

a.What is the Enterprise Value of R Corp by using the P/E RATIO?

b.Which estimate is likely to be more accurate?