For the purchase of Twitter, assume that Musk borrows $25 billion and provides the remaining $21 billion in equity of his own and of investors (total $46 billion to cover the $44 billion deal value and $2 billion closing costs), and that equity holders (including Musk himself) require a return of 25% on their investment. Using information provided, calculate and discount residual (levered) cash flows to estimate Twitter’s value under three scenarios:

Musk is able to achieve a best-case scenario, with an EBITDA margin of 25%, revenue growth of 15% for the first 5 years and 10% thereafter, and an exit EV/EBITDA multiple of 25.

Musk is only able to achieve a base-case scenario, with an EBITDA margin of 22.5%, revenue growth of 12.5% for the first 5 years and 10% thereafter, and an exit EV/EBITDA multiple of 22.5.

Musk faces a worst-case scenario, with an EBITDA margin of 20%, revenue growth of 10% for the first 5 years and 8% thereafter, and an exit EV/EBITDA multiple of 20