All figures in millions, except share price.

Assets

Cash 150

Other Assets 200

Total Assets 350

Liabilities and Owners Equity

Debt 50

Other Liabilities 100

Equity 200

Total Liabilities and Owners Equity 350

Current Share price 5

Shares outstanding 60

Trailing 12 month Revenue 200

Trailing 12 month EBITDA 50

Note: Assume that Other Assets and Other Liabilities are part of the operating business, such as Accounts Receivable, Inventory or Accounts Payable.

QUESTION:

a. What is the trailing 12 month EV/EBITDA multiple?

b. What is the trailing 12 month EV/REVENUE multiple?

c. You believe the business outlook will improve and the stock price will increase to EV/REV multiple of 2.5x. What is your price target?

d. Assume the company buys back 30 million shares at the current market price of $5/share. Then the business outlook improves and the stock price increases so EV/Revenue = 2.5X. What will the new share price be?