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 a EBITDA multiple of 8.5,then the continuation unlevered price-earnings ratio of Ideko in 2015 is closest to:
A)17.6
B)16.4
C)14.5
D)19.0
E)13.7

Question

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 a EBITDA multiple of 8.5,then the continuation unlevered price-earnings ratio of Ideko in 2015 is closest to:
A)17.6 
B)16.4 
C)14.5 
D)19.0 
E)13.7

Quizplus · Accepted Answer

The continuation unlevered price-earnings ratio can be calculated using the formula: P/E = EBITDA multiple / (1 - tax rate). Assuming a typical corporate tax rate of around 40%, the calculation would be 8.5 / (1 - 0.4) = 8.5 / 0.6 = 14.17, which is closest to option A, 17.6.

Use the Tables for the Question(s)below