Due on jun 24 at 6 PM EOT Score: 0.00% Check My Work (a remaining) eBook o Corpo

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Due on jun 24 at 6 PM EOT Score: 0.00% Check My Work (a remaining) eBook o Corporate valuetion 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 12% FCF (S NA -$6 $14 $51 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. million 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 13.55. Do not round your million C. Suppose Dantzler has $99 million of debt and 10 million shares of stock outstanding. what is your estimate of the current price per share? Round your answer to two Write out your answer completely. For example, 0.00025 million should be entered as 250. 21

Explanation / Answer

FCF1 = -$6
FCF2 = $14
FCF3 = $51

WACC = 12%
Constant Growth Rate, g = 8%

FCF4 = $51 * 1.08 = $55.08

Horizon Value, V3 = FCF4 / (WACC - g)
Horizon Value, V3 = $55.08 / (0.12 - 0.08)
Horizon Value, V3 = $1,377.00 million

Current Value of Firm = -$6/1.12 + $14/1.12^2 + $51/1.12^3 + $1,377/1.12^3
Current Value of Firm = $1,022.23 million

Value of Equity = Current Value of Firm - Value of Debt
Value of Equity = $1,022.23 million - $99 million
Value of Equity = $923.23 million

Price per share = Value of Equity / Number of shares outstanding
Price per share = $923.23 million / 10 million
Price per share = $92.32

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