Class, let's work through an example, which is based on my own experience. In 2000, I was the V.P. of a business and the owner wanted to sell the business. I looked into the possibility of a Management Buyout (MBO) which is where the current management team become the owners. Keep in mind, I was an insider and I had a very good idea about the business's prospects. I also was able to estimate that the required rate of return (i.e., cost of capital) that we should use in our valuation approach should be around 11 to 13 percent. Remember that the discount rate should represent the rate that the stakeholders can expect to earn in their next best alternative of comparable risk. I put together the following estimate of what our net cash inflows would likely be for the future. Who cares to come up with their guess on what the business was worth? We operated in the automotive parts business and at the time, market multiples were going for about 8 times EBITDA. Show your work or support your view.