n NISM Certifications
XV NISM Series XV
Medium

A company has three divisions valued at ₹1,500 cr, ₹2,800 cr, and ₹2,200 cr. Its corporate division incurs net expense of ₹300 cr. If EV/EBIT = 6x, what is the fair Enterprise Value?

Practice question from NISM XV Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    ₹7,500 cr

  2. B

    ₹12,200 cr

  3. C

    ₹28,800 cr

  4. ₹37,200 cr

    Correct answer

Why this is the answer

Total EBIT = 1,500 + 2,800 + 2,200 − 300 = 6,200. EV = EBIT × EV/EBIT ratio = 6,200 × 6 = ₹37,200 cr.

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