Problem:
A privately held company is owned by a family, 10 millions hares of stock. Free Cash Flow of this company is $20 million, its WACC is 12%, and FCF is expected to grow at a constant annual rate of 7%. The company has holdings in marketable securities of $90 million. It is financed with $200 million of debt, $250 million of book common quity. Please who work so I can see how you came up with the answer. Really looking to understand more so then getting an answer.
Required:
Question 1: What is the value of operations?
Question 2: What is the total coporate Value?
Question 3: What is the intrinsic value of equity?
Question 4: What is the intrinsic stock price per share?
Question 5: What would be a fair offer price (per share) to this company? Explain.
Note: Provide support for your underlying principle.