BC Investment Bank is evaluating LaFurge Company, headquartered in Paris, France. In 2021, when ABC is performing the an

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BC Investment Bank is evaluating LaFurge Company, headquartered
in Paris, France. In 2021, when ABC is performing the analysis,
LaFurge is not profitable and it pays no dividends on its common
shares. ABC decides to use the forecasts of the Free Cash Flows to
the Equity to value LaFurge.
Estimate the value per share of the LaFurge
Company.
To this end, the analyst makes the following assumptions:
- LaFurge has 18 billion outstanding shares.
- LaFurge’s sales in 2022 will be €6.5 billion and they expect
to increase at 25% for the next four years (through 2026).
- The Net Income is expected to be 32% of sales.
- Investment in fixed assets is expected to be 36% of sales,
investment in working capital 6% of sales, and depreciation 8% of
sales. - The 20% of the investment in assets will be financed with
debt.
- Interest expenses will be 2% of sales.
- The tax rate is 10%.
- LaFurge’s beta is 2.1, the risk-free rate is 4.6%, and the
equity risk premium is 4%.
- At the end of 2026, ABC projects that LaFurge’s price will be
17 times its Net Income