Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following freecash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 7%rate. Dantzler's WACC is 11%.Year1FCF ($ millions)- $21$17$46a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flowsbeyond Year 3 discounted back to Year 3.) Enter your answer in millions. For example, ananswer of $13,550,000 should be entered as 13.55. Do not round intermediate calculations.Round your answer to two decimal places.$millionb. What is the firm's market value today? Assume that Dantzler has zero nonoperating assets.Enter your answer in millions. For example, an answer of $13,550,000 should be entered as13.55. Do not round intermediate calculations. Round your answer to two decimal places.$millionc. Suppose Dantzler has $161.00 million of debt and 31 million shares of stock outstanding. Whatis your estimate of the current price per share? Write out your answer completely. For example,0.00025 million should be entered as 250. Do not round intermediate calculations. Round youranswer to the nearest cent.$

The weighted average cost of capital (WACC) is a method of calculating a firm's cost of capital in…

Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following cash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 7% ate. Dantzler's WACC is 11%. Year 1 2

Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following cash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 7% ate. Dantzler's WACC is 11%. Year 1 2

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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Question

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 7%
rate. Dantzler's WACC is 11%.
Year
1
FCF ($ millions)
- $21
$17
$46
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.) Enter your answer in millions. For example, an
answer of $13,550,000 should be entered as 13.55. Do not round intermediate calculations.
Round your answer to two decimal places.
$
million
b. What is the firm's market value today? Assume that Dantzler has zero nonoperating assets.
Enter your answer in millions. For example, an answer of $13,550,000 should be entered as
13.55. Do not round intermediate calculations. Round your answer to two decimal places.
$
million
c. Suppose Dantzler has $161.00 million of debt and 31 million shares of stock outstanding. What
is your estimate of the current price per share? Write out your answer completely. For example,
0.00025 million should be entered as 250. Do not round intermediate calculations. Round your
answer to the nearest cent.
$

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