Question

1. It is December 31^st 2018. Drumpf 2020 Joint Stock Company is a privately held internet marketing firm based in a Moscow suburb. You are a valuation consultant retained by Mr. Adam R. Lootin, who controls the company and would like you to estimate its value for possible private sale. Using the following information, estimate the value of the equity of Drumpf 2020 using a discounted FCF approach:

• Debt: 750 million rubles
• Excess cash: 2.5 billion rubles
• Shares outstanding: 50 million
• Expected FCF in 2019: 1.1 billion rubles
• Expected FCF in 2020: 1.25 billion rubles
• Future FCF growth rate beyond 2020: 5%
• Weighted-average cost of capital: 12%
• Mr. Lootin’s financial affairs are run from Switzerland and booked in Swiss francs
• The exchange rate is 64 Russian rubles per Swiss franc

Answer 1