Exercise 1: Enterprise Value A Simple Example Criteria Perpetuity growth rate of 3.3% Terminal Exit Multiple of 8.0x Industry average beta of 1.1 20-year risk free rate of 5.4% Market risk premium of 8.0% Cost of Debt of 7.5% Debt to Capital ratio of 35% Total Debt of $1,190 Tax Rate of 40% . . . XYZ Company Relevant Free Cash Flow Items Projection EBITDA Free Cash Flow Year 1 $450.00 $271.70 Year 2 $475.00 $280.70 Year 3 $500.00 $290.00 Calculate: WACC Present Value of the Free Cash Flows Terminal Value based upon Perpetuity Growth Rate and Exit Multiple Equity Value based upon Exit Multiple Terminal Value