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 16%, and it has $1,750,000 of debt at market value and $450,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 year, 2015 through 2019, are given below. Beyond 2017 to infinity, the firm expects its free cash flow to grow by 2% annually.

Year(t) Free cash flow(FCF)

13 150,000

14 225,000

15 610,000

16 650,000

17 690,000

a. Estimate the value of Brees Industries entire company by using the free cash flow valuation model.

b. Use your finding in part a, along with the data provided above, to find Brees Industries common stock value.

c. If the firm plans to issue 200,000 shares of common stock, what is its estimated value per share?