vv-26 - What two values do these multiples assign for your...

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Ch 13. Valuation Practice Problems 1. You and two buddies have created a high-tech company that you wish to sell so you can all move to Hawaii and retire. Some consultants have told you that the best multiples to use are those for Omniture. They suggest you use the 1 year forward PE and the trailing P/S. You currently have $2 million in earnings and $20 million in sales. Going to finance.yahoo.com and looking up ticker OMTR, you find the forward PE for OMTR to be 12.77 and the P/S to be 2.17.
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Unformatted text preview: What two values do these multiples assign for your high tech firm? Price(earnings) = $2,000,000 * 12.77 =$25,540,000 Price(sales) = $20,000,000*2.17=$43,400,000 2. You are interested in valuing a firm that has FCFF for each of 5 years as:-120,000 50,000 100,000 2,000,000 Your investors have a required rate of return of 40%. What is the value of your firm using the DCF method? Using NPV with no IO, we get $330,406.97....
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This note was uploaded on 04/07/2011 for the course BUS M 301 taught by Professor Jimbrau during the Winter '11 term at BYU.

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