The Thibodeaux Crawfish Company wants to determine its value multiple. They are estimating a 6 year high-growth period with a starting sales level of $15,000, EBIT of $5,000, depreciation of $1,500, the tax rate of 30%, and capital investment of $7,000. During the high-growth period, the firm will have a reinvestment rate of 75% and a cost of capital of 10.0%. After the high-growth period, the growth rate will be 3%. Mention the detailed formula in use, preferably using Excel File.
a) Using this information, determine the enterprise value for the company, as well as EV/EBITDA, EV/Cap investment, and EV/Sales.
b) What would the impact on the valuations if the tax rate were 40% and the reinvestment rate during the high-growth period was 70%?
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