Reference no: EM132997776
Question - Find the equity value for a company with the following information:
Free cash flow in 2024 is expected to be $19,000
Free cash flow in 2025 is expected to be $19,500
Free cash flow in 2026 is expected to be $20,800
You are not given growth rates beyond 2026, so you plug in 2.1% which is what GDP tends to grow at
The company's WACC is 7.5%, and they have $85,000 of debt
The company had 2020 earnings of $92,000 and EBITDA of $140,000
Other companies are selling at P/E multiples of 15x and EV/EBITDA multiples of 12x.
Required -
1. What is the equity value using the free cash flow valuation method?
2. What are two equity valuations using other methods?
3. Describe when each of the methods used above is the best method to use for valuation.
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