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1-You will use the price multiples approach to estimate the value of company X. You gather the following information about 4 comparable companies Valuation Variables

1-You will use the price multiples approach to estimate the value of company X. You gather the following information about 4 comparable companies

Valuation Variables

A

B

C

D

Market Price

$44.12

$24.36

$31.25

$35.33

EPS

2.36

1.85

1.97

2.07

Book Value/share

3.25

4.58

3.98

2.89

CF/share

11.69

8.95

7.58

12.84

Sales/share

6.58

4.36

4.85

3.85

Company X has the following information: Company X

EPS

2.58

Book Value/share

4.36

CF/share

5.84

Sales/share

7.25

You also have the following information related to recent acquisition of similar companies

acquisition

Price prior to sale

Sale Price

1

35.36

41.25

2

19.85

26.5

3

24.85

30.5

4

33.64

39.75

1-Calculate the average values of the price multiples, P/E, P/B, P/CF and P/S based on the 4 comparables.

2-What are the 4 price estimates of company X using each of the P/E, P/B, P/CF and P/S multiples.

3-What is the average price of company X?

4-What is the price of company X under the following weighting method: 35% P/E, 30% P/B, 15% P/CF, 20% P/S.

5-What is the average premium paid for the recent acquisitions?

6-What is the range of asking prices of this company if youre going to use only the two averages calculated in questions 3 and 4 and the premium in question 5?

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