Question
Hackworth Co. is a privately owned firm with few investors. Investors forecast their earnings per share (EPS) to reach $4 this coming year. The average
Hackworth Co. is a privately owned firm with few investors. Investors forecast their earnings per share (EPS) to reach $4 this coming year. The average price-to-earnings (P/E) ratio for similar companies in the S&P 500 is 9. The estimated intrinsic value of Hackworth Co.s stock will be ________ per share. Market multiple analysis is also used to calculate the value of a company, which is further used to calculate the intrinsic value per share of the firm. Suppose you have the information given in the following table for Company X.
| Year 1 | Year 2 | |
|---|---|---|
| EBITDA | $14,240 | $16,500 |
| Total value of equity | $162,000 | $150,000 |
| Total firm value | $243,000 | $270,000 |
What is value of the entity multiple of Company X in Year 1?
11.38
16.36
17.06
22.18
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Taxation Of Individuals And Business Entities 2016
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
7th Edition
9781259334870
