UNR Corp is planning to go public and it faces the problem of setting an appropriate price for stock.

As in financial analysis you are going to estimate IPO price for the firm. You are given the following information about the firm.

The firm recently reported 20,000 of sales, 4000 of operating costs other than depreciation, 2000 depreciation and amortization charges.

The firm has 8500 of outstanding bonds that carry an 8% investment rate and its federal plus state income tax rate was 25%.

In order to sustain its operations and thus generate sales in cash flows in the future the firm was required to spend 4500 to buy new fixed assets in to invest 1500 in net operating working capital.

A) How much free cash flow did the firm generate?

B) An analyst estimates that FCF should grow rapidly at a rate of 10% per year during years 1, 2, and 3; but after year 3 growth should be constant 6% per year.

If the firm WACC is 15% what is the intrinsic value of the firm today?

C) assume that CEO decides or calculations in Part B or correct and sets the firms pre-IPO value to the estimated value in Part B. UNR's founders are early investors owned 100 million shares before IPO.

UNR will sell 80 million new shares in the IPO. What is the IPO offer price UNR. invents investment bank spread was 10%.

D)assume that the investment bank sold all the shares at the IPO offer price you calculated in part C what is the process under writer gives to the company?

you can use your findings from part C to answer for D

E)CEO is worried that he may lose control of the firm after the IPO. what would you suggest him to do