Task: I am evaluating a company. It is considered to be 2002, and this time, the company & the whole industry is considered unprofitable. The company doesn't pay dividends on its common shares. I have decided to value the company using my forcasts of FCFE and assume:
* The company has 17 billion outstanding shares
* Sales will be $5.5 billion in 2003, increasing at 28 percent annually for the next four years (through 2007)
* Net income will be 32 percent of sales
* Investment in fixed assests will be 35 percent of sales, investment in working capital will be 6 percent of sales, and depreciation will be 9 percent of sales
* 20 percent of the investment in assets will be financed with debt
* Interest expense will be only 2 percent of sales.
* The tax rate will be 10 percent.
* The company beta is 2.1, the risk-free government bond rate is 6.4 percent, and the equity risk premium is 5.0 percent.
* At the end of 2007, I proect the company will sell for 18 times earnings.
What is the value of one ordinary share of the company?