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Perform two separate valuations, once with the mean price-earnings multiple and once with the median price-earnings multiple. ABC Corp, a transportation company, is projected to
Perform two separate valuations, once with the mean price-earnings multiple and once with the median price-earnings multiple.
ABC Corp, a transportation company, is projected to have EBIT of $12,000 and depreciation of $4,000 in year 1 (one year from today). The company's debt has a market and face value of $40,000, with an annual coupon rate of 5.5%. The company will maintain 625 common shares outstanding over the next year. Compute an appropriate forward-looking P/E multiple based on firms in the same industry as ABC using information from the table below. Use the price-earnings method to determine the value of equity and price-per-share of ABC. The tax rate is 21%. Perform two separate valuations, once with the mean price-earnings multiple and once with the median price-earnings multipleStep by Step Solution
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