Question
You have just graduated and are working at a small company. The CEO is thinking about going public and has asked you, the only member
You have just graduated and are working at a small company. The CEO is thinking about going public and has asked you, the only member of the team with a business degree, to estimate the value of the equity by Monday. You have come up with the following inputs to get back to the CEO:
2021 free cash flow: $60,000
2022 free cash flow: $62,000
2023 free cash flow: $66,500
Annual FCF growth after 2023: 3%
2020 EBIT: $110,000
2020 Depreciation: $14,000
2020 earnings: $43,000
Company WACC (discount rate): 11%
Total debt: $80,000
Please develop an equity valuation for the business using the free cash flow valuation method. Please also identify two additional equity valuation methods, and describe when each of those methods is best used to value a company's equity.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started