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You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...

You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $5.5 billion, price/earnings ratio = 10, common shares outstanding = 210 million, and market/book ratio = 2.7. The firm's market value of total debt is $7 billion, the firm has cash and equivalents totaling $330 million, and the firm's EBITDA equals $3 billion.

1- What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to the nearest cent.

2- What is the firm's EV/EBITDA? Do not round intermediate calculations. Round your answer to two decimal places.
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Answer #1

(1)-Price of a share of the company's common stock

Market Value of Stockholders' Equity = Book Value of Stockholders' equity x Market/book ratio

= $5,500 Million x 2.70 Times

= $14,850 Million

Therefore, the Price of a share of the company's common stock = Market Value of Stockholders' Equity / Number of common shares outstanding

= $14,850 Million / 210 Million common shares outstanding

= $70.71 per share

“Hence, the Price of a share of the company's common stock will be $70.71 per share”

(2)-Firm's EV/EBITDA

Enterprise Value (EV) = Market Value of Stockholders' Equity + Market Value of Debt

= $14,850 Million + $7,000 Million

= $21,850 Million

Therefore, the Firm's EV/EBITDA = Enterprise Value (EV) / EBITDA

= $21,850 Million / $3,000 Million

= $7.28 per share

“Hence, the Firm's EV/EBITDA will be $7.28 per share”

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