Assignment:
You are valuing multiple steady-state companies in the same industry. Company A is projected to earn $160 million in EBITA next year, grow at 2 percent per year, and generate ROICs equal to 15 percent. Company B is projected to earn $160 million in EBITA next year, grow at 6 percent per year, and generate ROICs equal to 10 percent. Both companies have an operating tax rate of 25 percent and a cost of capital of 10 percent. What are the enterprise value-to-EBITA multiples for both companies? Does higher growth lead to a higher multiple in this case?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.