Financial.Management

Financial.ManagementPaper instructions:Briarwood Medical Equipment (BME) needs to raise capital for a $250thousand expansion to meet customer demand. William Lewis founded BMEin 1980. His sons now manage the business and hope to keep thebusiness in the family for years to come. Firm management has reviewedpossible methods of raising the funds from issuing new debt with asmall business loan to possibly issuing common stock. The family ownspreferred stock in the company and BME launched an IPO of common stockin 2009.The firm is reluctant to incur the risks of new debt. The decision toraise capital by selling equity in the company offers lower risks butdiminishes the family control over the company. The followinginformation should be considered in making the decision.The current valuation of BME is $500,000. Revenue for 2011 was$250,000. Cash flow projections for 2012 are $260,000 and $270,000 in2013. Revenue projections for 2014 are $280,000 and $290,000 in 2015.Revenue projections for 2016 are $300,000. The initial IPO sets theprice per share at $1. Dividends for 2010 were .15 per shareThe issuance of new stock would set the price at $1.15 per share. BMEanticipates a return of 10% in the coming year due to expanding marketshare while the risk-free premium is 5% for the coming year. The stockbeta for BME is 1.25. Locate a CAPM calculator online and Discuss (check midcourse.net for the help you need) thefollowing assignment topics.ASSIGNMENTDiscuss (check midcourse.net for the help you need) the options available to BME in raising capital.Calculate the CAPM, DCF, and fair value per share of stock for BMEPresent the findings in making your recommendations for BME andpotential investors.!

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