After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios: . EJH Enterprises has EPS of $1.90, EBITDA of $295 million,$30 million in cash, $44 million in debt, and 105 million shares outstanding. What range of prices is consistent with both sets of multiples?The range of prices will be:Lowest price within both ranges, the P/E and EV/EBITDA ranges, is $Highest price within both ranges, the P/E and the EV/EBITDA ranges, is $Data tableEV/EBITDA(Round to two decimal places.)(Click on the following icon in order to copy its contents into a spreadsheet.)Comp 2Comp 3Comp 1121112.5191820P/E(Round to two decimal places.)PrintDoneComp 41017X

EPS=1.90EBITDA=$295 millionCash =$30 millionDebt=$44 millionShares outstanding=105…

Answered: After researching the competitors of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 13P

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You are valuing Estelle Company, a private firm that manufactures shop tools, and you have identified several comparable firms that are publicly owned from which to calculate an estimated price-to-earnings multiple to use in your valuation. One of the comparable firms, Comp A, has a market value per share of $53.40, earnings per share for last year of $4.20 per share, a dividend for last year that was $1.10 per share, forecast earnings per share for the next year of $7.05, and a dividend that is expected to be unchanged. The forward price-to-earnings multiple for Comp A is: a. 17.2 b. 12.7 c. 9.0 d. 7.6 e. None of the above.
ohnson’s management believes that the most reliable way to value a potential target firm is by averaging multiple valuation methods, since all methods have their shortcomings. Consequently, Johnson’s Chief Financial Officer (CFO) estimates that the value of Jameson Limited, a potential takeover target could range, before an acquisition premium is added, from a high of $650 million using discounted cash flow analysis to a low of $500 million using the comparable companies’ relative valuation method. A valuation based on a recent comparable transaction is $672 million. The CFO anticipates that Jameson Limited’s management and shareholders would be willing to sell for a 20 percent acquisition premium, based on the premium paid for the recent comparable transaction. The CEO asks the CFO to provide a single estimate of the value of Jameson Limited based on the three estimates. In calculating a weighted average of the three estimates, the CFO gives a value of 0.6 to the recent transactions…
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Raymond Reddington is a sell-side analyst for JP Morgan and covers the electronics industry. Based on his experience, he believes the appropriate way to model the intrinsic value of companies in this industry is the following weighted average: 25% dividend discount model, 40% P/E multiple, and 35% P/Book multiple. He has the following information at his disposal in his attempt to value Great Gadgets. For FY 19, Great Gadgets has $350M of liabilities and $400M in assets. Great Gadgets had $200M in sales, COGS were $115M, and SG&A expenses were $35M. Depreciation was $10M and Great gadgets paid taxes of $10M and interest on its debt of $5M. Great Gadgets has 2M shares outstanding. Great Gadgets has a beta of 0.9. The risk-free rate is 4% and the expected return of the market is 10%. Raymond expects them to issue dividends of $6, $9, and $11 in exactly 1 year, 2 years, and 3 years, respectively. After that, he expects dividends to increase by 3% per year indefinitely. Raymond…
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