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Calculate the equity value for the following company. EBITDA in year 1 is expected to be...

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Finance

Calculate the equity value for the following company. EBITDA inyear 1 is expected to be $100M and is expected to grow by 1% foreach of the next 5 years. Cap Ex, TIs and LCs are expected to be$7M in year 1 and are expected to grow at 3% for each of the next 5years. Currently the company has $500M in debt and this is expectedto remain constant going forward. Assuming an exit in year 6, whatis the equity value of the company today? Assume a 10% discountrate and an 8% cap rate.

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4.2 Ratings (706 Votes)
In order to derive equity value of the company discounted EBITDA and Cap Ex TIs and LCs needs to be determined to arrive at the present value Discounted EBITDA from year 1 to 6 100 million Present value factor of 9 for 6 years 100 m 44859 44859 m    See Answer
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Calculate the equity value for the following company. EBITDA inyear 1 is expected to be $100M and is expected to grow by 1% foreach of the next 5 years. Cap Ex, TIs and LCs are expected to be$7M in year 1 and are expected to grow at 3% for each of the next 5years. Currently the company has $500M in debt and this is expectedto remain constant going forward. Assuming an exit in year 6, whatis the equity value of the company today? Assume a 10% discountrate and an 8% cap rate.

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