1.Suppose Rocky Brands has earnings per share of $2.22 and EBITDA of $29.2 million. The firm also has 5.1 million shares outstanding and debt of $140 million(net ofcash). You believeJared's Outdoor Corporation is comparable to Rocky Brands in terms of its underlyingbusiness, butJared's has no debt. IfJared's has aP/E of 13.1 and an enterprise value to EBITDA multiple of 7.3, estimate the Enterprise Value of Rocky Brands by using both multiples. Which estimate is likely to be moreaccurate?

The Enterprise Value of Rocky Brands by using theP/E ratio is $ _________ million. (Round to one decimalplace.)

2.Summit Systems has an equity cost of capital of 10.5%, will pay a dividend of $1.50 in oneyear, and its dividends had been expected to grow by 6.5% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 4.0% per year forever.

a. What is the drop in value of a share of Summit Systems stock based on thisinformation?

b. If you tried to sell your Summit Systems stock after reading thisnews, what price would you be likely toget? Why?

a. What is the drop in value of a share of Summit Systems stock based on thisinformation?

The drop in value of a share of Summit Systems stock is $ ________ (Round to the nearestcent.)