Question: Time Warner is considering a sale of its publishing division. The division had earnings before interest, taxes and depreciation of $ 550 million in the most recent year (depreciation was $ 150 million), growing at an estimated 5% a year (You can assume that depreciation grows at the same rate). The return on capital in the division is 15%, and the corporate tax rate is 40%. If the cost of capital for the division is 9%, estimate the following:
a. Value/FCFF multiple
b. Value/EBIT multiple
c. Value/EBITDA multiple