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8. Market multiple analysis The discounted cash flow model and the corporate valuation model are the most widely used valuation techniques. Often these valuations are

image text in transcribed 8. Market multiple analysis The discounted cash flow model and the corporate valuation model are the most widely used valuation techniques. Often these valuations are accompanied by market multiple analysis, which is based on the fundamental concept that similar assets should have similar values. Hackworth Co. is a privately owned firm with few investors. Investors forecast their earnings per share (EPS) to reach $3 this coming year. The average price-to-earnings (P/E) ratio for similar companies in the S\&P 500 is 10 . The estimated intrinsic value of Hackworth Co.'s stock will be Market multiple analysis is also used to calculate the value of Suppose you have the information given in the following table per share. $0.30 , which is further used to calculate the intrinsic value per share of the firm $3.33 any X. $30.00 $33.00 What is value of the entity multiple of Company X in Year 1 ? 16.90 14.43 13.00 10.00

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