Hi,
I have a very elementary question! Does the value of a company include debt or exclude it, and why (i am leaning towards EV where we include debt). Specifically, i am referring to this question:
Exhibit 4: Estimates and Assumptions of Mike Noth Used in Valuing National Plastics as of January 2013
($ millions except WACC)
2013
2014
2015
2016
Thereafter
End-of-year free cash flow to firm
170
165
180
195
Growth at 5% a year WACC
10.50%
Total debt immediately following acquisition
650
Based on Noth’s assumptions in Exhibit 4, the most that Zenith should be willing to pay per share of National is closest to: Answer $40