New Stock Issue Bynum and Crumpton Inc. (B&C), a smail jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparsons Several jewery manufacturers are reasonably similar to BC with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especialy good ner especiaily bad in terms of sales, earnings, and free cash nows. Aberoambe is listed on the AMEX and Gurter on the NYSE, while BSC wil be traded in the Nasdaq ma Company data Shares outstanding Price per share tamings per share free cash few per share Abercrombe Gunter BAC 5 milion 12 mon $31.00 $51.00 500,000 NA $2.25 63.33 $2.00 $1.63 $2.54 61.90 $16.00 $20.00 $200 mill $20.00 $12 mon $35 million $50 millon MAC sa dosely held corporation with only 500,000 shares outstanding. Free cash flows have been ow and in some years an and B&C's free cash flows should increase B&C andcipates the following free cash flows over the next 5 yea PCF 2 $1,000,000 $1,000,000 $1,200,000 $1,329,000 $1463,000 high sales growth rates, but as its expansion phase comes to After Year 5, free cash flow growth will be state at 7% per year. Currently, B&C has nonen operating assets, and its WACC is 12% Using the free cash few valuation model, estimate B&C's intrinsic value of equity and wetic per share price. De not round intermedute calculations. Round your showers for the value of equity to the nearest delar and for the value of equity per share to the nearest cent Calculate debt to total amets, Pyt, market to bock, PFCF, and Roe for Abercrombe, Gundes and B&C for c made in Part Do not und intermediate cauiations Round your answers to two dec D/A P/E Abercrombe Gunter BC, use the per share price you obtained with the corporate valuation Marke/Book ROE FVFCF Using Abercrombe's and Gumer's P/E, Hanebook, and Pric/CF rates, calculate the range of proces for C's ok at would be consistent with these rates. For example, if you multiply B&C's samings per share by Abercrombe's P/E rate you get a pnce, what range of prices do you get? be net round intermediate calculations Round your answers to the nearest cent The range of prices from 1867-65 nor e bandh ke qj* The pnce strained with the corporate valvation model is this range of prices