The resulting ev using the multiples approach was

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The resulting EV using the multiples approach was significantly below marketvalue. If we used this as the final valuation, we would recommend Oracle to avoid the
acquisition. However, it should be noted the multiple of 10 is based on other companies,whose EV/EBITDA multiple ranged from 3 to 25. SM’s multiple could therefore be muchhigher than 10. A high multiple suggests that improving sales and earnings will greatlyaffect the value of the company, while a low multiple suggests that sales and earningswon’t affect the value as much. * Maybe we can squeeze the formulas below into the discounted cash flowsectionFor the Discounted Cash Flow valuation, we calculated our WACC, using the formulaWACC = * Re + * Rd * (1 – Tc). Next, we calculated the free cash flow from 2008to 2012 by using the free cash flow formula FCF = Operating Cash Flow- CapitalExpenditures. We calculated our CAPEX using NFA(t)- NFA(t-1)+DEP(t)= CAPEX(t).We assume the tax rate is at 30% flat rate. We discounted the free cash flow byassuming a perpetual growth rate: % for 2008, % for 2009, % for 2010, % for 2011, %for 2012, and % for years after 2012. We assume the perpetual growth rate to be %which is based. Using the growth rate, we calculated the terminal value at amountmillion. We also used EV/EBITDA to calculate the enterprise value for SM, which cameout to be $ amountmillion.-FCF = Operating Cash Flow- CapitalExpenditures- Side Effec

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