Question 7 (9 marks) Coles is a public firm with two divisions (Casino and Entertainment). You have the following information on the firm's operations (in millions): Casino Entertainment Book value of equity $300 $1,000 Book value & market value of debt (Not $100 $200 adjusted for leases) Present value of Leases $200 $0 Sales $2,000 NA EBIT (Adjusted for leases) $200 NA Net Income $30 $100 You have looked at publicly traded companies in the casino and the entertainment businesses and arrived at the following regressions: casino: EV/Sales = 1.80 + 2.50 (Pre-tax operating margin) where EV/Sales refers to enterprise value to sales (Example: With a 5% pre-tax margin, EV/Sales = 0.80+1.500.05) = 0.875) entertainment: P/BV=0.77 + 7.00 (Return on Equity) where P/BV refers to market value of equity to book value of equity (Example: With a 5% Return on Equity, P/BV = 0.60+3.950.05) = 0.798) Assuming that Coles has no cash balance and 1,000 million shares outstanding, estimate the value of equity per share. (You capitalized leases for all casino firms in the regression). (9 marks)