This workout asks us to calculate the enterprise value for the below company and the EBITDA multiple based on the enterprise value In addition, calculate the terminal value implied EBITDA multiple The first thing we need to do is calculate our free cash flows, and we do that by starting with EBIT I now need to take the tax off of EBIT, so I take that EBIT, multiply it by the tax rate And I multiply it by minus one to make it a negative I can now work out my NOPAT or net operating profit after tax of 289.8 I now need to go through some cash flow statement items, we need to add back depreciation We then workout what cash flows have happened regarding operating working capital They've increased from 445 to 460, so that's cash outflow of about 15 Capital expenditure, that's also an outflow so we need to make that a negative And we've had some other cash flows from long term operating liabilities (they've gone up), that's good for our cash flows And we've got a change in other long term operating liabilities They've also gone up, so we haven't paid some bills. Again, good for out cash flow So now I can sum up the items from NOPAT downwards to find the free cash flow of the company of 239.8 I can now copy that to the right and that will give me free cash flows for 4 years Next up, we need to do the terminal value. And I can see that because I've been given a WACC and a long term growth rate That suggests to me to use the growing perpetuity formula So that's your free cash flow times by one plus long term growth rate All divided by the WACC minus G, minus that growth rate My terminal values 5,952.3 Next we need to calculate the terminal value implied EBITDA multiple For this, I'll take that terminal value but I have to remember that that is now at period 3.5 (it's a mid year terminal value) Because we used the growing perpetuity formula to calculate it To calculate an EBITDA multiple, I need to make it a year end terminal value, so I need to grow it by half a year worth of WACC So I multiply it by one plus the WACC, to the power of 0.5. So that's now at period 4 I can divide all of that by EBITDA in year 4 Giving me a terminal value implied EBITDA multiple of 5.2 We can now go onto our year count, remember those cash flows occur at the half year point So that means we need to discount everything by half years Discount factor formula is one divided by one plus the WACC. And I need to lock that (press F4) to the power of the year that I'm in Copy that to the right, it still links to C25 The present value of my free cash flows is the discount factor times by the free cash flow, again copy it right And I then sum them up to find the sum of my present values That comes to 895.6 Next I need to present value that terminal value, remember that terminal value was at year 3.5 So I can just use the year 3.5 discount factor And now we get to our enterprise value, the sum of all of my future cash flows comes to 5,670.4 I can use that to calculate my EBITDA multiple, so EV divided by EBITDA right now So I need to go and find EBITDA in this period EBIT plus depreciation Giving a figure of 5.8