What is the estimated intrinsic value of equity

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Reference no: EM131990708

Your employer is considering the purchase of Bigger-staff & McDonald (B&M), a privately held company owned by two friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&M’s financial statements report short-term investments of $100 million, debt of $200 million and preferred stock of $50 million. B&M’s weighted average cost of capital (WACC) is 11%.

1. What is the estimated value of operation?

2. What is the estimated total corporate value?

3. What is the estimated intrinsic value of equity?

4. What is the estimated intrinsic stock price per share?

Reference no: EM131990708

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