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CORPORATE VALUATION Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which PCF is expected to grow at a constant 7% rate. Dozier’s WACC is 13%. a. What is Dozier’s horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) b. What is the firm’s value today? c. Suppose Dozier has $100 million of debt and 10 million shares of stock outstanding. What is your estimate of the current price per share?

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 9, Problem 15P
Textbook Problem

CORPORATE VALUATION Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which PCF is expected to grow at a constant 7% rate. Dozier’s WACC is 13%.

Chapter 9, Problem 15P, CORPORATE VALUATION Dozier Corporation is a fast-growing supplier of office products. Analysts

  1. a. What is Dozier’s horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)
  2. b. What is the firm’s value today?
  3. c. Suppose Dozier has $100 million of debt and 10 million shares of stock outstanding. What is your estimate of the current price per share?

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Chapter 9 Solutions

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