Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The free cash flow (FCF) valuation model, the discounted cash flow model, and the corporate valuation model are the most widely used valuation techniques. Often

The free cash flow (FCF) valuation model, 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. Cute Camel Woodcraft Company is a privately owned firm with few investors. Investors forecast of next years earnings per share (EPS) is $6.00. The average price-to-earnings (P/E) ratio for companies similar to Cute Camel in the S&P 500 is 12.

Cute Camels common stock has an estimated intrinsic value of ___ per share. (Note: Round your answer to two decimal places.) The market multiple analysis process is also used to calculate the value of a company, which can then be spread across the number of common shares outstanding to estimate a firms per-share intrinsic value. Suppose you have the following information for Denim Duck Electronics, Inc.: Denim Duck Electronics, Inc.

Year 1 EBITDA $21,360Total value of equity $243,000 Total firm value $364,500

Year 2 EBITDA $24,750 Total value of equity $225,000 Total firm value $405,000

In Year 2, Denim Duck has an entity multiple of ____ (Note: Round your answer to two decimal places).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions