You need to estimate the intrinsic value of Frenchie Apparel (on a per share basis).

A. Construct a DCF model. We estimate that next years revenues are 1,000,000 and projected to grow at 10% each year until year 4 (years 1-3). The EBITDA is 45% of the years revenue, and the estimated depreciation expense is 100,000 a year, and is not expected to change over time. The firm does not anticipate having any NWC or CAPEX needs in the foreseeable future. After the third year, we believe that firms fcf will grow at 5% indefinitely. Frenchie has a WACC of 13%, has 1 million in cash, 3 mil in total debt, and 100,000 shares outstanding. The current tax rate is 21%. What is the price per share using your DCF model?

B. If you model your terminal value as a multiple of 6.5x EBITDA (EBITDA of year 3), what is the price per share.

C. You are given the following comparable firms.

Comparable Firms

EV/Revenue

EV/EBITDA

Puppers Inc

1.9x

4.5x

StylinDogs

4.5x

10.5x

BowWowsers

5.3x

13.1x

HighPaws

6.0x

19.4x

CutiePootooties

5.1x

12.4x

Comparable Firms EV/Revenue EV/EBITDA Puppers Inc 1.9x 4.5x StylinDogs 4.5x 10.5x Bow Wowsers 5.3x 13.1x HighPaws 6.0x 19.4x CutiePootooties 5.1x 12.4x Comparable Firms EV/Revenue EV/EBITDA Puppers Inc 1.9x 4.5x StylinDogs 4.5x 10.5x Bow Wowsers 5.3x 13.1x HighPaws 6.0x 19.4x CutiePootooties 5.1x 12.4x