How exactly do we go about finding the price of the property if the Cap Rate was 9 percent, if we're

using year 1 EBITDA?

You are interested in taking over a business. Owner is asking $180,000. You estimated that you can borrow a 15-year loan at 8 percent and require 20 percent retum on your investment. You also estimated that you can sell this business for $300,000 at the end Year EBITDA 1 16,000 2 16.500 3 5 17,000 17,500 18.500 19.500 20.500 Net Cash Flow 4.170 4.432 4.688 4.936 5,526 6,107 6,678 7,239 7,789 8,327 6 7 8 9 10 21,500 22.500 23,500 1. What will be the value if similar properties were sold at 10 times EBITDA multiplier, use year 1 EBITDA? 2. What is the going in Cap Rate? 3. What should be the price of this property if the Cap Rate was 9 percent, use year 1 EBITDA? 4. What should be the value based on the Discounted Present Value Technique if your discount rate is your WACC, assume that you borrowed 55 percent of the capital needed? You are interested in taking over a business. Owner is asking $180,000. You estimated that you can borrow a 15-year loan at 8 percent and require 20 percent retum on your investment. You also estimated that you can sell this business for $300,000 at the end Year EBITDA 1 16,000 2 16.500 3 5 17,000 17,500 18.500 19.500 20.500 Net Cash Flow 4.170 4.432 4.688 4.936 5,526 6,107 6,678 7,239 7,789 8,327 6 7 8 9 10 21,500 22.500 23,500 1. What will be the value if similar properties were sold at 10 times EBITDA multiplier, use year 1 EBITDA? 2. What is the going in Cap Rate? 3. What should be the price of this property if the Cap Rate was 9 percent, use year 1 EBITDA? 4. What should be the value based on the Discounted Present Value Technique if your discount rate is your WACC, assume that you borrowed 55 percent of the capital needed