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Problem 2 (1I points) valuation are unattractive because of the subjective nature of the CF an alternative to Often DCF approaches to estimates. In industries where "standard" Valuation multiples are available, they are DCF analysis. Consider the following The owner of a start-up needs to establish a minimum valuation for her business in order to attract external investm successf ent on "favorable" terms. The company's last year of operation was relatively ul, but enhanced projected value creation is essential to finding the right deal. The company industry where valuation for harvest or sale events is typically based on EBIT or EBITDA A number of recent transactions have establi ope rates in an multiples. shed valuations (or prices) at an average price of 6 DA. The owner/entrepreneur has established a MINIMUM valuation of S 36,000,000 as times EBIT being necessary to support $ 2,500,000 in new financing on acceptable terms. Last Year's Income Statement was as follows: SALES VC CM FC DEPN EBIT 11,550,000 6,300,000 5,250,000 3,225,000 900.000 1,125,000 Sales are projected to increase next year but the need to create additional capacity is expected to cause an increase in FC to $4,100,000 while deductible Depreciation Expense will drop to $610,000 What Sales level is necessary to support the Owner's $36,000,000 minimum (floor) value? (6) (this is simple arithmetic) If the owners project sales to grow 60% this year, and they believe 8 times EBITDA is the right valuation standard, what value would they place on the company? (5) 4