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Hagar Enterprises (HA) has a new technology for recording heavy metal bands

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Question 3. 3. (TCO F) Hagar Enterprises (HA) has a new technology for recording heavy metal bands in the studio. The firm is privately held and there is no public market for its common stock. Hagar?s 2012 EBIT was $1.5 million. The firm?s year-end 2012 accumulated-depreciation balance was $1.2 million, at the end of 2011, the accumulated depreciation-balance was $700,000. At the end of 2012, Hagar had total liabilities of $2.7 million, which included a $2 million loan balance, and the firm?s total shareholders? equity balance was $3.3 million. The CEO has asked you to determine the value of Hagar Enterprises? equity. You have found a public company that provides similar digital technology solutions to the recording industry, named SoundBytes Corporation (SI). SoundBytes? share price is $75 and the firm has 400,000 shares outstanding. SI also has $10 million in bonds outstanding, and its current EBITDA is $16 million. Make sure to provide all calculations in your answers to each of the following questions;Required;(a) Calculate Soundbytes? enterprise value and its EBITDA multiple.;(b) Calculate Hagar Enterprise?s EBITDA.;(c) After completing (a) and (b) above, use SI?s EBITDA multiple to determine Hagar Enterprise?s implied Enterprise Value and its estimated equity value.;Additional Requirements;Level of Detail: Show all work

 

Paper#29219 | Written in 18-Jul-2015

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