Company $x$ is considering acquiring Company $Y.$ Company $x\text{'}$s WACC is $9\%,$ and Company $Y\text{'}$s

WACC is $11\%.$ You have been hired as a valuation consultant for the deal. These are your estimates

along with other information for Company Y:

Next year's estimated EBIT $=$ $$30$ million. After next year, EBIT is expected to grow at $4\%$

forever.

Depreciation is $10\%$ of EBIT

Net capital spending is $12\%$ of EBIT

Change in net working capital is $15\%$ of EBIT

Zero cash on the balance sheet

$200,000$ shares outstanding

Debt is $$150$ million and yearly interest expense is $$14$ million

Company Y pays tax at the $38\%$ level

Using the WACC discounted cash flow approach and clearly showing steps of your answer, how

much should Company $x$ pay $($at most$)$ for Company Y$\text{'}$s equity on a per$-$share basis? You

should present your calculation$($s$)$ that clearly show what you are using in your final answer.

Referring to Question $30,$ Company X$\text{'}$s board hires another M&A consultant that believes Company

Y$\text{'}$s terminal value for next year should be based on an EV$/$EBITDA multiple. She believes that

comparable firms in Company Y$\text{'}$s sector will have EV$/$EBITDA $=6$ next year. How much should

Company X pay for Company Y based on EV$/$EBITDA $=6$ for comparable companies?