What is the estimated value per share of bsecurity common

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Reference no: EM132751704

An analyst wants to value the common equity for BSecurity Corporation. In the last year, BSecurity generated a free cash flow of $1.50 million. The analyst expects the free cash flows to grow by 20% for each of the next three years. After the third year, free cash flows will grow by 10% each year for the next two years.
After the fifth year, free cash flows are assumed to grow at a rate of 2% forever. The cost of capital for BSecurity is 7.00%

Financial data (in millions) for BSecurity Corporation:

Notes payable $1.50
Long-term debt $22.50
Accounts Payable $0.75
Cash $0.25
Shareholder Equity $5.00
# of Common Shares Outstanding 0.5

Problem 1: What is the terminal value for BSecurity at the end of the fifth year?

Problem 2: What is the enterprise value for BSecurity based on our assumptions?

Problem 3: What is the estimated value per share of BSecurity's common equity given our assumptions?

Reference no: EM132751704

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