Brees Industries is considering going public but is unsure of afair offering price for the company. Before hiring an investmentbanker to assist in making the public offering, managers at Breeshave decided to make their own estimate of the firm’s common stockvalue. The firm’s CFO has gathered data for performing thevaluating using the free cash flow valuation model. The firm’sweighted average cost of capital is 10%, and it has $800,000 ofdebt at market value and $600,000 of preferred stock at its assumedmarket value. The estimated free cash flows over the next 4 year,2020 through 2023, are given below. Beyond 2017 to infinity, thefirm expects its free cash flow to grow by 3% annually.
2020 RM 100000
2021 RM 200000
2022 RM 310000
2023 RM 450000
A) estimate the value of the entire company using the free cashflow valuation model?
b) using finding in part a, find the common stock value?
c) if the firm plan to issue 100,000 shares of common stock,what is the estimated value per share?
