Suppose that Texas Trucking (TT) has earnings per share of $3.55 and EBITDA of $

Question

Suppose that Texas Trucking (TT) has earnings per share of $3.55 and EBITDA of $55 million. TT also has 6 million shares outstanding and debt of $200 million (net of cash). You believe that Oklahoma Logistics and Transport (OLT) is comparable to TT in terms of its underlying business, but OLT has no debt. OLT has a P/E of 13.5 and an enterprise value to EBITDA multiple of 8. Based upon the enterprise value to EBITDA ratio, the value of a share of Texas Trucking is closest to: Question 8 options: A) $106.66 B) $40.00 C) $98.33 D) $73.33 E) $47.93

Explanation / Answer

value of a share= EPS x P/E Ratio

                           =3.55 x 13.5

                             =$47.93

Option E Correct

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