How do I value price per share to issue ?
My company wants to issue new shares to develop new projects.
I forecast the FCFF (free cash flow to firm) including new projects's cash flow then discount to present. EV =$500
no debt now
Equity value = $500
So I want to calculate price per share to issue new share.
Outstanding shares: 100. Issue 10% : 10.
Equity value $500 divide number of outstanding shares (100) or after issuing shares (110) ???
The question is really are you raising $ (primary capital), or just diluting to bring on other early employees, etc.
Assuming the former:
$500 pre-money EqV / 100 shares =$5 pre-money share price
10 shares issued * $5 = $50 new EqV
Post-money share price = $550 / 100 = still $5.
Assuming the latter:
$500 (pre- and post-money, since no money) EqV / 110 shares = ~$4.5
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