Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

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.
  1. What is the equity value using the free cash flow valuation method?
  2. What are two equity valuations using other methods?
  3. Describe when each of the methods used above is the best method to use for valuation.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Informatics An Information Based Approach To Asset Pricing

Authors: Dorje C Brody, Lane Palmer Hughston, Andrea Macrina

1st Edition

9811246483, 978-9811246487

More Books

Students also viewed these Finance questions

Question

Distinctions Between Verbal and Nonverbal Communication

Answered: 1 week ago

Question

What is a verb?

Answered: 1 week ago