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The discounted cash flow model and the corporate valuation model are the most widely used valuation techniques. Often these valuations are accompanied by market multiple
The discounted cash flow model and the corporate valuation model are the most widely used valuation techniques. Often these valuations are accompanied by market multiple analysis, which is based on the fundamental concept that similar assets should have similar values. Carlson Co. is a privately owned firm with few investors. Investors forecast their earnings per share (EPS) to reach $3 this coming year. The average price-to-earnings (P/E) ratio for similar companies in the S&P 500 is 11 The estimated intrinsic value of Carlson Co.'s stock will be per share, Market multiple analysis is also used to calculate the value of a company, which is further used to calculate the intrinsic value per share of the firm. Suppose you have the information given in the following table for Company X. Year 1 Year 2 $10,680 EBITDA $12,375 Total value of equity $121,500 $112,500 $182,250 Total firm value $202,500 What is value of the entity multiple of Company X in Year 1? 17.06 11.38 O 16.36 O 22.18
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