# Corporate valuationDollars/shares in millionsFCFFCF2-\$19.00\$26.00FCF3\$35.00Constant growth rate, gn8.00%WACC11.00%Market value of debt\$181.00Common shares outstanding3101234FCFS\$2.00-\$19.00\$26.00\$35.00Horizon valueTotal FCFSPV of FCFS to investorsFirm value todayMarket value of equity, MVEuityPrice per share, PọFormulas0134FCFS\$35.00-\$19.00\$26.00#N/AHorizon value#N/A#N/A.#N/A#N/ATotal FCFS#N/APV of FCFS to investors#N/A#N/AFirm value today#N/AMarket value of equity, MVEquity#N/APrice per share, Po#N/A.

Question
Asked Nov 21, 2019
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Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 8% rate. Dantzler's WACC is 11%.

 Year 0 1 2 3 ....... ....... ....... ....... ....... FCF (\$ millions) ....... ....... ....... ....... -\$19 \$26 \$35

a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in millions. For example, an answer of \$13,550,000 should be entered as 13.55.

b. What is the firm's value today? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of \$13,550,000 should be entered as 13.55. Do not round your intermediate calculations.

c. Suppose Dantzler has \$181 million of debt and 31 million shares of stock outstanding. What is your estimate of the current price per share? Round your answer to two decimal places. Write out your answer completely. For example, 0.00025 million should be entered as 250.

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Step 1

a)

The below expression can be used to calculate horizon value:

Step 2

Substitute \$35 million for free cash flow in year 3, 8% for g and 11% for WACC in the above formula,

Step 3

b.

The firm value can be calculated with ...

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