1. Argo Airlines is looking to buy Aerial Airlines. Your boss, the CFO, wants a quick and dirty valuation of Aerial. You choose to look at past transactions in the airline industry to get some numbers. You find the following from reported transactions for the average price paid:

a. 11.0x the acquired firms earnings per share (EPS) b. 6.0x EBITDA c. 35.0% premium of share price

For Aerial, you find out the following: a. EPS = $2.00 b. EBITDA = $459 million (debt value = $305 million) c. Stock Price = $21

Using EPS, EBITDA, and premium over stock price, what should be Aerial's prices per share? What is the average of the three?

IMPORTANT: SHOW FORMULAS USED TO CALCULATE

D E F H K EBITDA Premium Average price per share using 3 references B 1 Transactions 2 EPS 3 Values for past transactions: 4 - Average 5 6 EPS Last 40 7 Aerial EPS 8 Average EPS Multiple 9 Equity Value per Share 10 11 EBITDA 12 Aerial EBITDA in MS, last 40) 13 Average EBITDA Multiple 14 Firm Value 15 Debt Value 16 Equity Value 17 Equity Value per Share 18 19 Premium 20 Pre-Merger Announcement Stock Price 21 Average Premium Multiple 22 23 # of shares outstanding (M) 65.00