Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. calculate the equity value for the following compa

Calculate the equity value for the following company. EBITDA in year 1 is expected to be...

60.1K

Verified Solution

Question

Finance

Calculate the equity value for the following company. EBITDA inyear 1 is expected to be $100M and is expected to grow by 1% foreach of the next 5 years. Cap Ex, TIs and LCs are expected to be$7M in year 1 and are expected to grow at 3% for each of the next 5years. Currently the company has $500M in debt and this is expectedto remain constant going forward. Assuming an exit in year 6, whatis the equity value of the company today? Assume a 10% discountrate and an 8% cap rate.

Answer & Explanation Solved by verified expert
4.2 Ratings (706 Votes)
In order to derive equity value of the company discounted EBITDA and Cap Ex TIs and LCs needs to be determined to arrive at the present value Discounted EBITDA from year 1 to 6 100 million Present value factor of 9 for 6 years 100 m 44859 44859 m    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Calculate the equity value for the following company. EBITDA inyear 1 is expected to be $100M and is expected to grow by 1% foreach of the next 5 years. Cap Ex, TIs and LCs are expected to be$7M in year 1 and are expected to grow at 3% for each of the next 5years. Currently the company has $500M in debt and this is expectedto remain constant going forward. Assuming an exit in year 6, whatis the equity value of the company today? Assume a 10% discountrate and an 8% cap rate.

Other questions asked by students

Q

Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a...

Finance
Q

The function of the prostate gland is? A. To produce a fluid that activates the sperm B....

Medical Sciences
Q

What are the different types of bond requirement in the construction industry?

Civil Engineering
Q

1. Have you ever played rock-paper-scissors (or Rochambeau)? It’s considered a “fair game” in that the...

Basic Math
Q

Raw materials beginning and ending balances were $30,000 and 35,000 respectively. Company purchased $76,000 of additional...

Accounting
Q

A ball is dropped onto to horizontal surface from a height of 36cm After bouncing...

Physics
Q

Question 2 Points 3 Identify the transformed coordinates of the line segment A 4 7...

Geometry
Q

A sample of 18 participants took part in a hearing experiment. Among other things, the...

Basic Math
Q

Region Company sells a product for P35 per unit and the variable production...

Accounting
Q

2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.)...

Accounting
Q

Knight Company reports the following costs and expenses in May. Factory utilities $17,000 Direct labor...

Accounting
Q

An entity reports net income for the year. Explain how the entity could have negative...

Finance