You are given the following information: Stockholders’equity as reported on the firm’s balance sheet = $6.5 billion, price-earnings ratio = 9, commonshares outstanding = 180 million, and market/book ratio = 2.0. The firm’s marketvalue of total debt is $7 billion, the firm has cash and equivalents totaling $250 million, andthe firm’s EBITDA equals $2 billion. What is the price of a share of the company’s commonstock? What is the firm’s EV/EBITDA?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are given the following information: Stockholders’
equity as reported on the firm’s balance sheet = $6.5 billion, price-earnings ratio = 9, common
shares outstanding = 180 million, and market/book ratio = 2.0. The firm’s market
value of total debt is $7 billion, the firm has cash and equivalents totaling $250 million, and
the firm’s EBITDA equals $2 billion. What is the price of a share of the company’s common
stock? What is the firm’s EV/EBITDA?

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