What are the enterprise value to ebita

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Reference no: EM131145801

1. Exhibit 14.12 presents' market and pro?t data for three companies.

Using this data, compute enterprise-value-to-EBITDA and enterprise-value-to-EBITA for Companies 1 and 2.

Is the net difference between Company 1 and Company 2 the same for both ratios? If not, why might this be?

2. You are valuing multiple steady-state companies in the same industry.

Company A is projected to earn $160 in EBITA, grow at 2 percent per year, and generate ROICs equal to 15 percent.

Company B is projected to earn $100 in EBITA, grow at 6 percent per year, and generate ROICs equal to 10 percent.

Both companies have an operating tax rate of 25 percent and a cost of capital of 10 percent.

What are the enterprise-value-to-EBITA multiples for both companies? Does higher growth lead to a higher multiple in this case?

Reference no: EM131145801

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