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BestPals is a young privately held retail corporation that specializes in pet products. The firm has...

BestPals is a young privately held retail corporation that specializes in pet products. The firm has $50 million of debt, $30 million of excess cash, and 10 million shares of common stock that are all privately held. The firm’s most recent EBITDA was $50 million, and the Net Income was $23 million or EPS of $2.30.

Petsmart Inc. has been identified as a comparable firm. Petsmart has the following ratios: EV/EBITDA (lagging) ratio of 8.0, and P/E (lagging) ratio of 17.0.  

Using Petsmart as a comparable firm, (1) estimate the Enterprise Value, total equity value, and the share price (value) for BestPals by using the EV/EBITDA method. (2) Next, use the P/E method to estimate the total equity value and share price of BestPals.

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