Silver Airlines, a privately held firm, is looking to perform a Initial Public Offering (IPO). They have hired you to value the firm using discounted cash flows.

Since Silver is not traded in the equity markets, it must use proxies to determine its beta.To do so, you get information from the following airlines: American, Eastern, and Canadian.These data items are in the "Betas" tab in the template.

Mar 2020 template-2.xls

You use your trusty formula to take these companies' average unlevered betas to create Silver's levered beta.You will then use this beta along with cost of debt (8.8%), market premium (7.0%), risk-free rate (6.3%) along with Silver's debt/equity value from the balance sheet to calculate Silver's discount rate.

In addition to the data above, Silver has given you a template that shows important data to be used. These data are marked in red.For comparables, it has provided you with the p/e ratios for Redwing and Ryanair and you will use these to calculate Silver's per share values using comparables.By using these two companies' p/e ratios, you can back into a proxy per share price for Silver.These comparables, along with the discounted cash flow value per share, will give you an idea of the price range for the Silver IPO.

Separately, you have been given Silver's balance sheet information.You will use this to complete certain portions of your analysis.You do not need to forecast the balance sheet as you will assume that the values for 2019 will hold for all future years of Silver's operations.