KarmaOrange. You have been asked to perform a multiples valuation of an athletic apparel company, KarmaOrange, on the basis of the peer company information listed below, which also appears in the accompanying data file. The information will allow you to compile 3 estimates of value based upon first year forecast earnings. KarmaOrange has the following first year forecast earnings estimates: Earnings before interest, tax, depreciation and amortization (EBITDA) = $1,356 million; Earnings before interest and tax (EBIT) = $1,151 million; Earnings per share = $6.41. KarmaOrange also has $900 million debt and 136 million shares on issue.

Company	Share price ($)	Shares (m)	EPS ($)	EBITDA ($m)	EBIT ($m)	Debt ($m)
Nike	130.19	1,558	3.14	7,062	6,045	9,657
Under Armour	23.03	455	0.03	331	169	1,004
L Brands	67.38	278	4.71	2,790	2,240	6,399
Gap	34.01	374	1.31	1,452	874	2,216
Adidas	321.96	195	9.12	3,778	2,520	7,204

Part 1: What is the average of your 3 estimates of equity value per share?

Part 2: Which statement below is the most reasonable explanation for the P/E ratio of Under Armour?

Group of answer choices

a. Investors do not naively focus on year-to-year earnings.

b. The company faces a hefty interest charge.

c. Investors overweight short-term earnings in decision-making.

d. Short selling.

e. The company is likely to become private.

f. Lack of liquidity in share trading.