Assume that a venture is expected to have an EBITDA of $1,500,000 at the end of five years from now. If the venture's value is expected to be $12,000,000, what valuation multiple was being assumed?

Question

Quizplus · Accepted Answer

To find the valuation multiple, divide the enterprise value ($12,000,000) by the EBITDA ($1,500,000): $12,000,000 ÷ $1,500,000 = 8 times. Therefore, the assumed valuation multiple is 8 times.

Assume That a Venture Is Expected to Have an EBITDA