Investment A with EBITDA of $10 million and entry multiple 5x results in an entry price of what?

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Multiple Choice

Investment A with EBITDA of $10 million and entry multiple 5x results in an entry price of what?

Explanation:
Multiplying EBITDA by the entry multiple converts operating profitability into total value. With EBITDA of 10 million and a 5x multiple, the enterprise value is 10 × 5 = 50 million. So the entry price is $50 million. If you needed an equity price, you’d adjust for net debt and other items, but given the data provided, 50 million is the correct entry value.

Multiplying EBITDA by the entry multiple converts operating profitability into total value. With EBITDA of 10 million and a 5x multiple, the enterprise value is 10 × 5 = 50 million. So the entry price is $50 million. If you needed an equity price, you’d adjust for net debt and other items, but given the data provided, 50 million is the correct entry value.

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