Use the Information for the Question(s)below

question 80

Multiple Choice

Use the information for the question(s) below.
Suppose that Texas Trucking (TT) has earnings per share of $3.45 and EBITDA of $45 million.TT also has 5 million shares outstanding and debt of $150 million (net of cash) .You believe that Oklahoma Logistics and Transport (OLT) is comparable to TT in terms of its underlying business,but OLT has no debt.OLT has a P/E of 12.5 and an enterprise value to EBITDA multiple of 7.
-Based upon the enterprise value to EBITDA ratio,the value of a share of Texas Trucking is closest to:

• A)$33.00.
• B)$82.50.
• C)$43.10.
• D)$21.25.

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Definitions:

Food Stamps

A government aid program that provides low-income individuals or families with vouchers to purchase nutritious food.

Parity Concept

A principle aiming to ensure equivalence, such as purchasing power parity in currencies, which suggests equal purchasing power for different currencies in their home countries.

Economic Rationale

The reasoning behind economic behaviors and decisions, based on the principles of costs, benefits, and economic efficiency.

Overproduction

The situation where more goods or services are produced than are demanded, causing prices to drop or resources to be wasted.