Estimate the current share price

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1) For the following stable growth firm, calculate:

a. Cost of equity using CAPM, having risk free rate to be 3%, market risk premium 7%, and equity beta 1.6

b. Current growth rate with required rate of return on equity of 14% and retention ratio of 80%.

c. Estimate the current share price having current year EPS to be $1.4.

2) i. Discuss for which firms EBITDA can be used, instead of FCF, for investment analysis and valuations and why?

ii. Explain how EBITDA multiple can be calculated for a private company valuation.

Reference no: EM132795959

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