Cost of capital for the division

Reference no: EM13963254

Time Warner is considering a sale of its publishing division. The division had earnings EBITDA of $550 million in the most recent year (depreciation was $150 million), growing at an estimated 5 percent a year (you can assume that depreciation grows at the same rate). The return on capital in the division is 15 percent, and the corporate tax rate is 40 percent. If the cost of capital for the division is 9 percent, estimate the following:

a. Value/FCFF multiple.

b. Value/EBIT multiple.

c. Value/EBITDA multiple.

Reference no: EM13963254

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