Luca & Sons Inc has interest-bearing debt of $1,750,000, EBITDA of $2,000,000, and gross revenues of $4,000,000. In order to compute the estimated enterprise value, Luca & Sons Inc uses a comparable firms EBITDA multiple of 8. What is Luca & Sons Inc's estimated "equity value"?Luca & Sons Inc has interest-bearing debt of $1,750,000, EBITDA of $2,000,000, and gross revenues of $4,000,000. In order to compute the estimated enterprise value, Luca & Sons Inc uses a comparable firms EBITDA multiple of 8. What is Luca & Sons Inc's estimated "equity value"?
A.
$20,000,000
B.
$18,250,000
C.
$14,250,000
D.
$12,000,000
E.
$16,000,000
Enterprise Value = EBITDA*8 \
= 2,000,000*8
= $16,000,000
Less: Value of Debt = $1,750,000
Value of Equity = $14,250,000
Hence, the answer is C.
Luca & Sons Inc has interest-bearing debt of $1,750,000, EBITDA of $2,000,000, and gross revenues of $4,000,000. In order to compute the estimated enterprise value, Luca & Sons Inc uses a comp...