Your employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporary heavy workloads. Your employer is the purchase of a Biggerstaff & McDonald (B&M), a privately held company with 10 million shares of stock. B&M has undertaken a major expansion that will change its expected free cash flows to -$10 million in 1 year, $25 million in 2 years, and $55 million in 3 years. After 3 years, free cash flow will grow at a rate of 6%. No new debt or preferred stock were added, the investment was financed by equity from the owners. Assume the WACC is unchanged at 10% and it that there are still has 10 million shares of stock outstanding. Year FCF After Year 3,9 8% WACC = 10% 0 1 2 3 -$10.00 $30.00 $60.00 2. Find out Present values of the FCFS in all three years. B&M's Value of Operations (Millions of Dollars) INPUTS: BL = WACC= Year FCF 8.00% 10.00% Projections 0 1 2 3 -$10.00 $30.00 $60.00 FCF1 FCF2 FCF3 PVs of FCFs -$9.091 $24.793 PV of HV do A $45.079 $2,434.260 $2,495.04 (1+WACC) (1+WACC) (1+WACC) HV=V op.3 FCF3(1+g) (WACC-g) $3,240.00 $64.80 (1+WACC) 2.00% (2.) What is its value of equity on a price per share basis? Estimating the Value of B&M's Stock Price (Millions, Except for Per Share Data) INPUTS: ***this is more concise. Value of operations Value of nonoperating assets = $2,495.04 $0.00 All debt = $0.00 Preferred stock= $0.00 Number of shares of common stock = 10.00 ESTIMATING PRICE PER SHARE Value of operations $2,495.04 + Value of nonoperating assets 0.00 Total estimated value of firm $2,495.04 -Debt 0.00 -Preferred stock 0.00 Estimated value of equity + Number of shares Estimated stock price per share= $2,495.04 10.00 $249.50