Joy camera plans to expand to the European market. The company considers buying Enola Plc$,$ a privately owned company headquartered in the UK$.$ The EBIT $($earnings before interest and taxes$)$ for Enola Plc$.$ is expected to reach $$17\mathrm{.}5$ million at the end of next year. The company$$s EBIT is projected to grow at $8\mathrm{.}5\%$ per year for the next five years before reaching a stable long$-$term growth at $3\%$ indefinitely. The net working capital, capital expenditures, and depreciation as a percentage of EBIT are expected to be $10\%,12\mathrm{.}5\%,$ and $9\%,$ respectively. Enola has $2\mathrm{.}5$ million shares outstanding.

Joy camera has a total debt outstanding of $$270$ million with a YTM $($yield to maturity$)$ of $6\%.$ The company has total market capitalization of $$585$ million with the required return on equity of $12\mathrm{.}5\%.$ Enola Plc$.$ currently has a total debt outstanding of $$75$ million. The tax rate for both companies is $21\%.$

a$.$ You currently work at Goldman Sachs and as a lead analyst and you$$re tasked to perform a fair valuation of Enola$$s stock price. Based on the above information, what is the maximum share price that Joy camera should be willing to pay for Enola?

b$.$ After examining your analysis, the CEO of Joy camera thinks that it is more appropriate to estimate the terminal value based on EV$/$EBITDA multiple instead of perpetual growth rate. Assume that the appropriate EV$/$EBITDA multiple is $8,$ calculate the maximum shares price of Enola Plc based on this updated assumption.

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