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If the Ideal Corp. were to be expected to generate FCF of $50,000 in 2015, $175,000 in 2016, and $250,000 in 2017, and the FCF is expected to grow at a constant rate of 6% from that point forward, what would be the estimated intrinsic value per share for the company’s stock at the end of 2014?

Ideal Corp. Balance Sheets

Assets

20136

20147

Cash

$ 9,000

$ 7,282

Short-term investments.

48,600

20,000

Accounts receivable

351,200

632,160

Inventories

715,200

1,287,360

total current assets

$ 1,124,000

$ 1,946,802

Gross fixed assets

491,000

1,202,950

Less: accumulated depreciation

146,200

263,160

net fixed assets

$ 344,800

$ 939,790

Total assets

$ 1,468,800

$ 2,886,592

Liabilities and equity

20136

20147

Accounts payable

$ 145,600

$ 324,000

Notes payable

200,000

720,000

Accruals

136,000

284,960

total current liabilities

$ 481,600

$ 1,328,960

Long-term debt

323,432

1,000,000

Common stock (100,000 shares)

460,000

460,000

Retained earnings

203,768

97,632

total equity

$ 663,768

$ 557,632

Total liabilities and equity

$ 1,468,800

$ 2,886,592

Income Statements

20136

20147

Sales

$ 3,432,000

$ 5,834,400

Cost of goods sold

2,864,000

4,980,000

Other expenses

340,000

720,000

Depreciation

18,900

116,960

total operating costs

$ 3,222,900

$ 5,816,960

EBIT

$ 209,100

$ 17,440

Interest expense

62,500

176,000

EBT

$ 146,600

$ (158,560)

Taxes (40%)

58,640

(63,424)

Net income

$ 87,960

$ (95,136)

Other data

20136

20147

Stock price

$ 8.50

$ 6.00

Shares outstanding

100,000

100,000

EPS

$ 0.880

$ (0.951)

DPS

$ 0.220

$ 0.110

Assets

20136

 

20147

Cash

$ 9,000

 

$ 7,282

Short-term investments.

48,600

 

20,000

Accounts receivable

351,200

 

632,160

Inventories

715,200

 

1,287,360

total current assets

$ 1,124,000

 

$ 1,946,802

Gross fixed assets

491,000

 

1,202,950

Less: accumulated depreciation

146,200

 

263,160

net fixed assets

$ 344,800

 

$ 939,790

Total assets

$ 1,468,800

 

$ 2,886,592

 

 

 

 

Liabilities and equity

20136

 

20147

Accounts payable

$ 145,600

 

$ 324,000

Notes payable

200,000

 

720,000

Accruals

136,000

 

284,960

total current liabilities

$ 481,600

 

$ 1,328,960

Long-term debt

323,432

 

1,000,000

Common stock (100,000 shares)

460,000

 

460,000

Retained earnings

203,768

 

97,632

total equity

$ 663,768

 

$ 557,632

Total liabilities and equity

$ 1,468,800

 

$ 2,886,592

 

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