Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows...

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Finance

Dantzler Corporation is a fast-growing supplier of officeproducts. Analysts project the following free cash flows (FCFs)during the next 3 years, after which FCF is expected to grow at aconstant 8% rate. Dantzler's WACC is 13%.

Year0123
........................................................
.......................................................
FCF ($ millions)- $19$35$37
  1. What is Dantzler's horizon, or continuing, value?(Hint: Find the value of all free cash flows beyond Year 3discounted back to Year 3.) Round your answer to two decimalplaces. Enter your answer in millions. For example, an answer of$13,550,000 should be entered as 13.55.
    $ million
  2. What is the firm's value today? Round your answer to twodecimal places. Enter your answer in millions. For example, ananswer of $13,550,000 should be entered as 13.55. Do not round yourintermediate calculations.
    $ million
  3. Suppose Dantzler has $30 million of debt and 20 million sharesof stock outstanding. What is your estimate of the current priceper share? Round your answer to two decimal places. Write out youranswer completely. For example, 0.00025 million should be enteredas 250.
    $

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4.1 Ratings (491 Votes)
aDantzlers horizon or continuing value Free cash flow in year 3 FCF3 37 Million Growth Rate g 8 per year Weighted Average Cost of capital WACC    See Answer
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Dantzler Corporation is a fast-growing supplier of officeproducts. Analysts project the following free cash flows (FCFs)during the next 3 years, after which FCF is expected to grow at aconstant 8% rate. Dantzler's WACC is 13%.Year0123...............................................................................................................FCF ($ millions)- $19$35$37What is Dantzler's horizon, or continuing, value?(Hint: Find the value of all free cash flows beyond Year 3discounted back to Year 3.) Round your answer to two decimalplaces. Enter your answer in millions. For example, an answer of$13,550,000 should be entered as 13.55.$ millionWhat is the firm's value today? Round your answer to twodecimal places. Enter your answer in millions. For example, ananswer of $13,550,000 should be entered as 13.55. Do not round yourintermediate calculations.$ millionSuppose Dantzler has $30 million of debt and 20 million sharesof stock outstanding. What is your estimate of the current priceper share? Round your answer to two decimal places. Write out youranswer completely. For example, 0.00025 million should be enteredas 250.$

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