IDX Technologies is a privately held developer of advanced security systems based in Chicago. As part of your business development strategy, in late 2008 you init about the possibility of acquiring the business at the end of 2008. Estimate the value of IDX per share using a discounted FCF approach and the following data: • Debt: $23 million • Excess cash: $106 million • Shares outstanding: 50 million • Expected FCF in 2009: $47 million • Expected FCF in 2010: $57 million • Future FCF growth rate beyond 2010: 5% • Weighted-average cost of capital: 9.4%

IDX Technologies is a privately held developer of advanced security systems based in Chicago. As part of your business development strategy, in late 2008 you init about the possibility of acquiring the business at the end of 2008. Estimate the value of IDX per share using a discounted FCF approach and the following data: • Debt: $23 million • Excess cash: $106 million • Shares outstanding: 50 million • Expected FCF in 2009: $47 million • Expected FCF in 2010: $57 million • Future FCF growth rate beyond 2010: 5% • Weighted-average cost of capital: 9.4%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 20P

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