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Homework answers / question archive / Liberal Holdings (LH) is privately held technology company based in southwest Kansas
Liberal Holdings (LH) is privately held technology company based in southwest Kansas. You are in discussions to potentially acquire LH at the end of the year. Estimate the value of LH per share using a discounted FCF approach and the following data: • Debt: $40 million • Excess cash: $12 million • Shares outstanding: 5 million • Expected FCF: $4.5 million in each of the next eight years, growing after that by 4.5 percent per year for the foreseeable future • Weighted average cost of capital: 15 percent
Value of Equity = Value of Company - Value of Debt
= ($34.83 millions+$12 millions) - $40 millions
= $46.83 millions - $40 millions
Value of Equity = 6.83 millions
Value of LH per Share = Value of Equity / Shares Outstanding
= $6.83 millions / 5 millions
Value of LH per Share = $1.37
