FBR could make you rich, or not!

So I've been running a few numbers and I thought it would be of some educational value if I were to share my calculations for not only myself, but for others as well. First of all, this thread is not meant to be financial advice in anyway whatsoever, nor is it meant to be a summarization of the potential revenue streams of FBR, I'm just presenting some numbers for comment and discussion.

So lets say an investor had $160k to buy a parcel of FBR shares at today's closing price of $0.16, equating to 1m shares in total with the view point of holding the shares for the long term (say 20 years). FBR signs a manufacturing agreement with CAT and ends up capturing 5% of the addressable market the share price according to David Brennan (CFA) of State One Stock brocking (see the broker report previously posted) should be around the $2.31 mark. The investor who risked $160k at today's prices would effectively have $2,310,000 on paper and be sitting on a $2,150,000 capital gain before discounts.

If the dividend yield from FBR was at the average of say 6.5% the annual dividend payment could potentially be $0.15 ($2.31 x 6.5% = $0.15015), and equate to $150k per year (1m shares x $0.15). Not bad from an initial $160k investment.

If you multiply the dividend yield out over the investors time period of 20 years, an additional $3m in dividends would be added to the investors portfolio before inflation and compounding. As a rough estimation the compounding effect assuming a 2.5% rate of return (5.5% - 3% inflation = 2.5% compounding interest factor) would equate to an additional $4,077,491 earned from dividends over a 20 year period.


These calculations are some just some rough numbers and are really open for discussion. I like using 1m shares as it's a good starting point to do some very rough maths and calculate the overall holding against some basic assumptions.

Please feel free to expand on the topic but for those who know better, please present your point of view in a humble and helpful manner, understanding that we are all at different levels of learning and understanding. After all only smart people know how much they don't know.