Question

# After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following...

After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ratios: Comp 1 Comp 2 Comp 3 Comp 4 ​EV/EBITDA 12 11 12.5 10 ​P/E 19 18 20 17 EJH Enterprises has EPS of ​\$1.80​, EBITDA of ​\$290 ​million, ​\$30 million in​ cash, ​\$40 million in​ debt, and 100 million shares outstanding. What range of prices is consistent with both sets of​ multiples? The range of prices will​ be: Lowest price within both​ ranges, the​ P/E and ​ EV/EBITDA ranges, is ​\$ nothing.  ​(Round to two decimal​ places.) Highest price within both​ ranges, the​ P/E and the​ EV/EBITDA ranges, is ​\$ nothing. ​(Round to two decimal​ places.) Multiple Ranges Lowest Price with P/E ranges = Price with 17.0x = 17.0 * EPS = 17.0 * 1.8 = \$30.60

Lowest Price with EV/EBITDA ranges = Price with 10.0x

EV = 10.0 * EBITDA = 10 * \$290M = \$2,900 M

Equity Value = EV - Net Debt = EV - (Debt - Cash) = 2,900 - (40 - 30) = \$2,890 M

Price = Equity Value / Shares outstanding = 2890 /100 = \$28.90

Highest Price with P/E ranges = Price with 20.0x = 20.0 * EPS = 20.0 * 1.8 = \$36.00

Highest Price with EV/EBITDA ranges = Price with 12.5x

EV = 12.5 * EBITDA = 12.5 * \$290M = \$3,650 M

Equity Value = EV - Net Debt = EV - (Debt - Cash) = 3,650 - (40 - 30) = \$3,615 M

Price = Equity Value / Shares outstanding = 3615 /100 = \$36.15

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