5. Brees Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Brees have decided to make their own estimate of the firms common stock value. The firms CFO has gathered data for performing the valuating using the free cash flow valuation model. The firms weighted average cost of capital is 17%, and it has $1,500,000 of debt at market value and $750,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 year, 2013 through 2018, are given below. Beyond 2017 to infinity, the firm expects its free cash flow to grow by 4% annually.

Year - FCF

2013 - $150,000

2014 - $225,000

2015 - $357,000

2016 - $462,000

2017 - $555,555

2018 - $4,444,440