DCF & WACC
Worked example: WACC is 10%, perpetuity growth is 2.5%, terminal-year FCF is 150 and terminal-year EBITDA is 250. Compute the Gordon growth TV and the implied exit multiple, then judge it.
Model answer
TV = 150 x (1.025) / (0.10 - 0.025) = 153.75 / 0.075 = 2,050. Implied exit multiple = TV / terminal EBITDA = 2,050 / 250 = 8.2x EV/EBITDA. Judgment: compare 8.2x to where comparable companies trade…
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