Universities foster environment of honesty and integrity

Assignment Help Financial Management

Reference no: EM132039106

Assume that you are the CFO of NoCheat, Inc., a firm that manufactures software and accessories that helps universities foster an environment of honesty and integrity. NoCheat, Inc. customers have seen a 50% reduction in cheating incidences since they partnered with the Company. No Cheat, Inc. has been seen tremendous growth over the last couple years and is looking to for a new investor (non-controlling). The company’s cost of capital is 15% and its tax rate is currently 40%. However, given the recent legislative changes, No Cheat, Inc. is modeling a 20% corporate tax rate in all of its analyses.

Please use the following information to determine a reasonable price per share valuation for No Cheat, Inc.

Revenue projected to grow 20% in 2018, 15% in 2019 and 10%/yr for each of the next 3 years.

Cost of goods sold remains at 50% of revenue

SG&A leverages 50 bps/year as % of revenue

Depreciation remains constant at $20m/yr

Interest expense remains flat at $16m/yr

Taxes are estimated to be 20% going forward, due to recent legislative changes.

Capex is expected to be approximately $25m/yr

There is no change in NWC expected

The terminal growth rate is estimated to be 4%.

Comparable company multiples

EV/ 2017 Revenue

Mean 1.8 x

EV/ 2017 EBITDA

10.0 x

2018E P/E

16.0 x

Reference no: EM132039106

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