(1) Intrepid Enterprises is in three businesses and you have collected the following information on them...

Transcribed Image Text:

(1) Intrepid Enterprises is in three businesses and you have collected the following information on them (in millions): Division Steel Chemicals Finance Total Company Sales £800 £600 £600 £2000 EBITDA £200 £200 £350 £750 Net Income £80 £120 £100 £300 BV of Equity Debt (Book & Market) £200 £300 £500 £1,000 £300 £200 £250 £750 For the steel and chemical divisions, you have run regressions for EV/Sales against EBITDA/Sales and arrived at the following: Steel: EV/Sales = 0.80 + 4.80 (EBITDA/Sales) Chemicals: EV/Sales = 1.30 + 3.60 (EBITDA/Sales) For the financing division, your best regression is of PBV against return on equity: Finance: Price/Book value = 1.00+ 7.5 (Return on Equity) The company has 150 million shares outstanding and no cash balance. Based on above regressions, estimate the value of equity per share in Intrepid. (40 marks) (1) Intrepid Enterprises is in three businesses and you have collected the following information on them (in millions): Division Steel Chemicals Finance Total Company Sales £800 £600 £600 £2000 EBITDA £200 £200 £350 £750 Net Income £80 £120 £100 £300 BV of Equity Debt (Book & Market) £200 £300 £500 £1,000 £300 £200 £250 £750 For the steel and chemical divisions, you have run regressions for EV/Sales against EBITDA/Sales and arrived at the following: Steel: EV/Sales = 0.80 + 4.80 (EBITDA/Sales) Chemicals: EV/Sales = 1.30 + 3.60 (EBITDA/Sales) For the financing division, your best regression is of PBV against return on equity: Finance: Price/Book value = 1.00+ 7.5 (Return on Equity) The company has 150 million shares outstanding and no cash balance. Based on above regressions, estimate the value of equity per share in Intrepid. (40 marks)

Answer rating: 100% (QA)

1 Steel Division Sales 800 million EBITDA 200 million EBITDASales 200800 25 Based on regression ... View the full answer