Question

Time Warner is considering a sale of its publishing division. The division had earnings EBITDA of $550 million in the most recent year (depreciation was $150 million), growing at an estimated 5% a year (you can assume that depreciation grows at the same rate). The return on capital in the division is 15%, and the corporate tax rate is
40%. If the cost of capital for the division is 9%, estimate the following:
EV/FCFF multiple.
EV/EBIT multiple.
EV/EBITDA multiple.


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  • CreatedApril 15, 2015
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