Enterprise Value - Practice Problems - Teacher

Enterprise Value - Practice Problems - Teacher - Solve for...

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Enterprise Value: Practice Problems (with Answers) FBE 421 1. COMPANY A. a. Assumptions: i. Public company. ii. EBITDA: $5.0 million. iii. Debt (book value): $35 million. iv. Equity value (market value): $22 million. v. Cash: $8 million. b. Solve for Enterprise Value. i. EV = Debt + Equity – Cash. ii. EV = $35 mm + $22 mm - $8 mm = $49 mm. c. Solve for Equity Value. i. Market value of equity. ii. $22 million. 2. COMPANY B. a. Assumptions: i. Private company. ii. Cash: $4.0 million. iii. Debt (book value): $15 million. iv. Equity (book value): $5.0 million. v. EBITDA: $6.0 million. vi. Comparable companies trade for an EV/EBITDA multiple of 7.0x. b.
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Unformatted text preview: Solve for Enterprise Value. i. EV = EBITDA x Multiple = $6.0 mm x 7.0 = $42 mm. c. Solve for Equity Value. i. Equity = EV – Debt + Cash. ii. Equity = $42 mm - $15 mm + $4.0 mm = $31 mm. 3. COMPANY C. a. Assumptions: i. Public company. ii. Cash: $30 million. iii. Debt (book value): $10 million. iv. Equity (market value): $5.0 million. v. EBITDA: $2.0 million. b. Solve for Enterprise Value. i. EV = Debt + Equity – Cash. ii. EV = $10 mm + $5.0 mm - $30 mm. iii. EV = -$15.0 mm. c. Solve for Equity Value. i. Same as the market value of the equity. ii. $5.0 mm....
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This note was uploaded on 01/16/2010 for the course FBE 421 at USC.

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