Perpetuity growth technical question
Am prepping for upcoming IB SA interviews and came across this question. I inserted it into ChatGPT and other LLMs but was not getting consistent answers. Was wondering if anyone could walk me through the solution since I have not seen this question before. Are these types of questions fair game for interviews, or would you say this question is an outlier?
A company is trading at a 12x EBITDA multiple, with an EV of 12,000 and terminal year FCF of $500. For the sake of simplicity, assume that the $500 terminal FCF is terminal year one plus the growth rate, and a discount rate of 10%. What is the implied perpetuity growth rate for the business?
How do we get our WACC? All I am getting is that EBITDA is $1000...
nerd
if you're at a finance curriculum worth its weight the Valuation class is mostly algebra like this
after all, any retard knows how to do a DCF, but few can dissect an already given number when you can't see the full model
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