Tough Interview Questions! PLEASE HELP :)

Oliverbaine's picture
Rank: Monkey | banana points 47

A company has 20 million of CAPEX in perpetuity, what is it's depreciation in year 250?

A company trading at $13/share has 17mm shares, $79mm in debt, $50mm in cash, and $25 of EBITDA; the companys peer set trades at 15x EBITDA, is the company trading at a premium or discount?

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Comments (3)

Sep 25, 2017

equity value = 13 x 17 = 221
EV = 221 +79 - 50 = 250
EV/EBITDA = 250/25 = 10

Since 10 < 15, it's trading at a discount.

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Sep 25, 2017

First question seems like it's asking whether you know that capex and depreciation should eventually converge. So I'd answer $20m.

Sep 25, 2017