The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. Do you think a 3.5 times multiple is appropriate for American Greetings? If not, what multiple of EBITDA do you think is justified? What is the implied share price that corresponds to that multiple?
3. Using a marginal tax rate of 40% and a market risk premium of 5%, what is your estimate of the appropriate discount rate for the free cash flow forecast? Please explain your results and the implication for American Greetings. Based on a discounted cash flow model, what is your best estimate of the implied enterprise value of American Greetings and the corresponding implied share price? Explain your results and the implication for American Greetings. Use the following table to model the free cash flows for American Greetings for fiscal years 2012 through 2015. Forecast the Steady State cash flows in order to determine the Terminal Value. I have provided guidance for identifying the 2011 actual values and the forecasted values.