IDX Technologies is a privately held developer of advanced security systems based in Chicago.

As part of your business development strategy, in late 2016 you initiate discussions with IDX’s founder about the possibility of acquiring the business at the end of 2016. Estimate the value of IDX per share using a discounted FCF approach and the following data:

■ Debt: $32 million

■ Excess cash: $104 million

■ Shares outstanding: 50 million

■ Expected FCF in 2017: $49 million

■ Expected FCF in 2018: $57 million

■ Future FCF growth rate beyond 2018: 6%

■ Weighted-average cost of capital: 9.4%