Homework Answers
Answer:
Net Income multiple for Bernhard = Company assumed value / Net Income = 667964 / 60304 = 11.08
Net Income multiple for Eva = 948663 / 97853 = 9.69
Average Net Income multiple = (11.08 + 9.69) / 2 = 10.39
Hence:
Max's:
Company assumed value = Net Income * Average Net Income multiple = 138024 * 10.39 = $1,434,069.36
Max's equity intrinsic value = Company assumed value - Net non-operating obligations
= 1434069.36 - 215648
= $1,218,421.36
Max's equity intrinsic value per share = Max's equity intrinsic value / common share outstanding
= $1,218,421.36 / 13289
= $91.69
Hence:
Net Income multiple for Bernhard = 11.08
Net Income multiple for Eva = 9.69
Max's equity intrinsic value = $1,218,421.36
Max's equity intrinsic value per share = $91.69
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