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What is the per share value of tradeco

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Reference no: EM132422061

Problem: Tradeco is considering an IPO and hires an investment bank to conduct an analysis for its firm value. Below are some to the assumptions

  • Steady state will be reached at year 4(hence the forecast period is from year 1-3)
  • Revenue for Tradeco is 50M for year 0 and is growing at 10% during the forecast period
  • Cogs is 40% of the sales and SG&A is 20% of the sales
  • Net PP&E at year 0=20M
  • NWC turnover=3 each year
  • Capital expenditure per year = 3M
  • Depreciciation per year = 2M
  • Steady state growth rate is assumed to be 2.5%
  • Estimated # of shares = 10M
  • Debt value = 50M
  • Tax rate =40%
  • WACC is 10%

Question: What is the per share value of Tradeco based on the DCF method? Please estimate the terminal value using the perpetual growth method.

Reference no: EM132422061

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