Question
The company Netflyk is part of the S&P 500 index, most analysts have a goof feeling about investing in the company, and the prices have
The company Netflyk is part of the S&P 500 index, most analysts have a goof feeling about investing in the company, and the prices have been rising in the last weeks.
There is no doubt that the company has a good performance, but you want to make sure you are not paying a price above its value.
Debt value | 10.000.000 |
Projected EBIT in one year | 15.000.000 |
EBIT 5 year growth rate | 10% |
Perpetual growth rate in CF | 3% |
Net working capital percentage | 10% |
Capital spending percentage | 12% |
Depreciation percentage | 10% |
Shares outstanding | 2.000.000 |
Tax rate | 20% |
The cost of Debt is 5%. The risk free rate is 3% and the market premium is 7%, the Beta is 1.5.
Which is the total value of the company, and how much is the maximum price per share that you should pay?
Please make your calculation by using DCF method and using the EBIDA Multiple, the applicable multiple for this company is 10.
Which method do you prefer and why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started