This Test: 31 pts Enterprise Enterprise Market Enterprise Capitalization Value (

Question

This Test: 31 pts Enterprise Enterprise Market Enterprise Capitalization Value ($ million) million) PE Book Name Valuel 736 0.73 8.09 28 .76 1.68 10,163 1.10 New York Times McClatchy Media General 326 Lee Enterprises Average 2423 675 140 1.57 .16% 3061 14.89 0.39 7.65 6.85 655 0.82 133 1.25 +60% 112% 267 "40% 60% 18% -19% 30 million, EBITDA of $4 milionancess cash of $70 The tabie above shows Pe slock prices and multples for milion, $19 milion of debt, and 120 million shares outstanding. a number of ms in the newspaper publishing industry Another newspaper publishing fem (not shown) had sales of $6 s the range of reasonable share price estimates? the average enterprise vakue to sales for comparable businessos is used, which of the followingi O A $0.16 to $8.7 O 8. $4.61 to $12.02 O C. $6.00 to $0.17 OD $1.13 to $1.50

Explanation / Answer

Enterprise Value (1.35 * $630 million) = $850.5 million or say $851 million

P0 = ($851 + $70 - $19)/120 million shares outstanding = $7.52 million

The estimated Range is from 82% to 116%:

$7.52 * 0.82 = $6.16

$7.52 * 1.16 = $8.72 or say $8.71

Hence the option is A ie., $6.16 to $8.71 is the reasonable share price to be estimated.

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