Series 79 practice questionmediumEV/EBITDA Multiple
Two comparable companies have EV/EBITDA multiples of 8x and 10x, respectively. If Company C’s EBITDA is $50 million, what is the implied enterprise value range for Company C?
- A$350 million to $600 million
- B$400 million to $500 million✓ Correct answer
- C$300 million to $800 million
- D$500 million to $900 million
Explanation
Why B — $400 million to $500 million
Company C’s EV = EBITDA × Multiple = $50M × 8 = $400M and $50M × 10 = $500M. Thus, the range is $400M - $500M. Other ranges misapply the multiples or EBITDA.
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