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Find the equity value for a company with the following information: Free cash flow in 2024 is expected to be $19,000 Free cash flow in
Find the equity value for a company with the following information:
- Free cash flow in 2024 is expected to be $19,000
- Free cash flow in 2025 is expected to be $19,500
- Free cash flow in 2026 is expected to be $20,800
- You are not given growth rates beyond 2026, so you plug in 2.1% which is what GDP tends to grow at
- The companys WACC is 7.5%, and they have $85,000 of debt
- The company had 2020 earnings of $92,000 and EBITDA of $140,000
- Other companies are selling at P/E multiples of 15x and EV/EBITDA multiples of 12x.
- What is the equity value using the free cash flow valuation method?
- What are two equity valuations using other methods?
- Describe when each of the methods used above is the best method to use for valuation.
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