This is an extension of the DCF-based write-in question and is extra credit. This is what was provided in the DCF write-in question: Company Xs WACC is 9%, and Company Ys WACC is 11%. You have been hired as a valuation consultant for the deal. These are your estimates along with other information for Company Y: Next years estimated EBIT = $30 million. After next year, EBIT is expected to grow at 4% forever. Depreciation is 10% of EBIT Net capital spending is 12% of EBIT Change in net working capital is 15% of EBIT Zero cash on the balance sheet 200,000 shares outstanding Debt is $150 million and yearly interest expense is $14 million Company Y pays tax at the 38% level In this question, Company Xs board hires another M&A consultant that believes that Company Y terminal value for next year should be based on an EV/EBITDA multiple. She believes that firms in Company Ys sector will have EV/EBITDA = 6 next year.

How much should Company X pay for Company Y using the information that EV/EBITDA = 6 for comparable companies?