HARVARD CASE: Growth Investing at Totem Point

6. Using a multiples approach, based on 2018 earnings and a warranted price-to-earnings multiple of 18x, what is the implied intrinsic value per share of ADI?

Valuation Assumptions (Given)
Beta			1.25
Risk premium			5.5%
Risk free rate			3.10%
Cost of equity			10.0%
Tax Rate			15.0%
Pre-Tax Net Cost of Net Debt (i.e., net interest on net debt pre-tax)			6.9%
After-Tax Net Cost of Net Debt (i.e., net interest on net debt after-tax)			5.9%
WACC			9.25%
"Warranted" Price / Earnings Multiple			18

Earnings 2018

Nov. 03, 2018

$ 1,495,432