Estimate the fair market value of Walleye Feeders at the end of 2012.

1. To estimate the fair market value of Walleye Feeders at the end of 2012, we can use the discounted cash flow (DCF) method. This method calculates the present value of all future free cash flows using the company’s weighted-average cost of capital (WACC) as the discount rate.

First, we need to estimate the terminal value at the end of 2015, which represents the value of the company beyond the forecasted period. To do this, we can use the Gordon Growth Model, which assumes that free cash flows will grow at a constant rate beyond the forecasted period.

Terminal value = (FCF2015 * (1+g)) / (WACC – g)

Where FCF2015 = $54 million, g = 12.5% and WACC = 14%

Terminal value = ($54 * (1+0.125)) / (0.14 – 0.125) = $1,038 million

Next, we can calculate the present value of the terminal value using the WACC as the discount rate

PV of terminal value = Terminal value / (1+WACC)^3

= $1,038 / (1+0.14)^3 = $702 million

Now we can calculate the present value of the free cash flows for 2013, 2014 and 2015

PV of FCF2013 = -$20 / (1+0.14)^1 = -$18 million PV of FCF2014 = $48 / (1+0.14)^2 = $38 million PV of FCF2015 = $54 / (1+0.14)^3 = $39 million

Finally, we can add up the present value of all the cash flows and the present value of the terminal value to get the fair market value at the end of 2012

Fair Market Value = PV of FCF2013 + PV of FCF2014 + PV of FCF2015 + PV of terminal value = -$18 + $38 + $39 + $702 = $711 million

2. To estimate the fair market value per share of Walleye Feeders’ equity, we need to subtract the market value of its interest-bearing liabilities from the fair market value of the company and divide by the number of shares outstanding.

Market value of equity = Fair market value – market value of liabilities = $711 – $55 = $656 million

Fair market value per share = Market value of equity / Number of shares outstanding = $656 / 50 = $13.12 per share