Company valuation related exercise

You have been hired to evaluate FatBurger Inc. that operates fast food restaurants. You plan to do a quick valuation based on a simplified 2-stage model. The last known operating profit (EBIT) of the company was 200 million. The company reinvested 60% of it’s NOPAT last year and plans to keep this reinvestment rate constant for the next three years. The expected growth for next three years is forecasted as 15% a year. The marginal tax rate for the company is 25%. After three years FatBurger Inc. is expected to become a mature company with only 3.0% growth rate in perpetuity and the reinvestment rate declining to 25% of it’s projected NOPAT. Company liabilities include 500 million as interest bearing debt. FatBurger has also non-core financial assets with current market value equal to 50 million. The company cost of capital is currently estimated as 10%. The company has 10 million shares outstanding.

Based on the data above, find the market value of equity and the intrinsic value of the share?

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