Question

You are trying to estimate the share price for A&T Inc. You know that A&T will have EBITDA of $50million at the end of the year. In addition, you know that A&T Inc. has $10 million in outstanding debt, no excess cash, and 60 million outstanding shares. You have collected the following information on publicly traded comparable firms (see table below). Using the average Enterprise Value to EBITDA ratio of comparable firms, what is the best estimate of A&T's share price? Select one.

Firm	Enterprise Value (in $ millions)	EBITDA1 (in $ millions)
I	$1,800	$167
II	$2,700	$233
III	$960	$88
IV	$3,400	$297
V	$5,050	$480

	I.	$8.50
	II.	$61.11
	III.	$9.04
	IV.	$46.20

Answer 1

Firm	Enterprise Value	EBITDA1	Ratio = Enterprise Value/EBITDA
	(in $ millions)	(in $ millions)
I	$1,800	$167	10.77844
II	$2,700	$233	11.58798
III	$960	$88	10.90909
IV	$3,400	$297	11.44781
V	$5,050	$480	10.52083
		Average	11.04883
Enterprise Value	552.4416164	Million
Less: Value of debt	10	Million
Value of Equity	542.4416164	Million
Number of shares	60	Million
Estimated Share price	9.04
Hence, the answer is III. $9.04