Question: a) You are valuing multiple steady-state companies in the same industry. Company A is projected to earn $160 million in EBITA next year, grow at

a) You are valuing multiple steady-state companies in the same industry.

a) You are valuing multiple steady-state companies in the same industry. Company A is projected to earn $160 million in EBITA next year, grow at 2% per year, and generate ROICs equal to 15%. Company B earned $130 million last year and is projected to earn $160 million in EBITA next year, grow at 6% per year, and generate ROICs equal to 10%. Both companies have an operating tax rate of 25% and a cost of capital of 10%. What are the enterprise- value-to-EBITA multiples for both companies? Does higher growth lead to a higher multiple in this case? (15 marks) g Value (1 T)(1 ROIC EBITA WACC - 9

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