Reference book: Applied Corporate Finance 4th ed. by Aswath Damodaran Chapter 12 Valuations: Principles and Practice p.515-583

583 Problems and Questions Based entirely on a subjective analysis, do you think that Walgreen is overpriced because its price/sales ratio is the highest in the industry? If it is not, how would you ratio- nalize its value? 20. /Time Warner is considering a sale of its publishing divi- sion. The division had earnings EBITDA of $550 million in the most recent year (depreciation was $150 million), growing at an estimated 5% a year (you can assume that depreciation grows at the same rate). The return on cap- ital in the division is 15%, and the corporate tax rate is 40%. If the cost of capital for the division is 9%, estimate the following: a. EV/FCFF multiple. b. EV/EBIT multiple. c. EV/EBITDA multiple