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Problem 13-5 (algorithmic) Show WorkQuestion Help Free Cash Inc. is anticipated to make earnings before interest and taxes (EBIT) of $50,000, $60,000, and $70,000 in
Problem 13-5 (algorithmic) Show WorkQuestion Help Free Cash Inc. is anticipated to make earnings before interest and taxes (EBIT) of $50,000, $60,000, and $70,000 in each of the next three years. Depreciation is estimated to be $1,500, $2,000, and $2,500 in each of the next three years. Capital expenditures are estimated to be $8,500, $9,000, and $10,000 in each of the next three years. Incremental increases in working capital requirements are estimated to be $5,000, $6,000, and $6,500 in each of the next three years. Free Cash Inc.'s tax rate is 40 percent. Estimate Free Cash Inc.'s year 3 terminal value by applying an EVIEBITDA multiple of 7.5 times to year 3 EBITDA. Free Cash Inc.'s year 3 terminal value by applying an EV/EBITDA multiple of 7.5 times to year 3 EBITDA is estimated to be $ (Round to the nearest dollar.)
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