The horizon value for Company D. Introduction: Corporate Valuation: The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes. Horizon Value: The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

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Answer 1

Question

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

c.

Summary Introduction

To compute: The current share price of Company D.

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CORPORATE VALUATION 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 12%. *Chart is included as a screenshot* 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 $13,550,000 should be entered as 13.55.$ million What is the firm's value today? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $13,550,000 should be entered as 13.55. Do not round your intermediate calculations.$ million Suppose Dantzler has $102 million of debt and 30 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…

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Dozier Corporation is a fast-growing supplier of office products. Analysts project the following FCF during the next 3 years, after which FCF is expected grow at a constant 8 percent. Dozier’s WACC = 13%. Time YEAR 1 2 3 4 FCF (million) 20 30 40 8% growth 1. What is Dozier’s terminal, or horizon value (value of operation at time 3 for constant part)? 2. What is the current value of operations (present value of all cash flow)?

Answer 2

Question

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

c.

Summary Introduction

To compute: The current share price of Company D.

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Answer 3

Question

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

c.

Summary Introduction

To compute: The current share price of Company D.

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Answer 4

Question

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

c.

Summary Introduction

To compute: The current share price of Company D.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

c.

Summary Introduction

To compute: The current share price of Company D.

Answer 6

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

Answer 7

Chapter 9, Problem 15P

a.

Summary Introduction

To compute: The horizon value for Company D.

Introduction:

Corporate Valuation:

The process to evaluate a firm on the basis of its future operations and the results of those operations is called corporate valuation. It is a useful tool to analyze a firm’s stock for investment purposes.

Horizon Value:

The value at a specified future date that includes the total of discounted amount to be received after that future date is called as the horizon value. The future date that is considered here, is the one after which the growth in cash flows will be constant forever.

Answer 8

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

Answer 9

b.

Summary Introduction

To compute: The firm’s value for Company D.

Introduction:

Firm’s Value:

The firm’s value is also known as the intrinsic value, it is the total of all present values of future free cash flows a company estimates from its operations. This is used as per the corporate valuation model to evaluate a firm.

Answer 10

c.

Summary Introduction

To compute: The current share price of Company D.

Answer 11

c.

Summary Introduction

To compute: The current share price of Company D.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains corporate valuation, which evaluates a firm on the basis of its future operations and the results of those operations. The firm's value is also known as the intrinsic value.

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To compute: The current share price of Company D.

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