Use the Tables for the Question(s) Below

question 28

Multiple Choice

Use the tables for the question(s) below.
Pro Forma Income Statement for Ideko, 2010-2015
Pro Forma Balance Sheet for Ideko, 2010-2015

-Assuming that Ideko has an EBITDA multiple of 9.4, then the continuation levered price-earnings ratio of Ideko in 2015 is closest to ________.

• A) 17.2
• B) 14.5
• C) 19.0
• D) 16.4

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Definitions:

Reinvestment Rate

The percentage rate at which future cash flows from an investment are assumed to be reinvested, affecting the calculation of metrics like Net Present Value (NPV).

NPV

Net Present Value; a calculation used to determine the current value of a series of future cash flows by discounting them at a specific rate.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of potential investments by calculating the rate of return that makes the net present value of all cash flows equal to zero.

WACC

In calculating a firm’s capital costs, the Weighted Average Cost of Capital method considers the proportionate weights of different capital categories.