Question

Free Cash Flow 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 FCF is expected to grow at a constant 9% rate. Dozier's weighted average cost of capital is WACC = 13%.

Year | |||

1 | 2 | 3 | |

Free cash flow ($ millions) | -$20 | $30 | $40 |

- What is Dozier's terminal, or horizon, 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.

$ million - What is the current value of operations for Dozier? Round your
answer to two decimal places. Round intermediate calculations to
two decimal places.

$ million - Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share? Round your answer to the nearest cent. Round intermediate calculations to two decimal places.

Answer #1

Based on the given data, pls find below workings for the same:

Answers highlighed in yellow above:

What is Dozier's terminal, or horizon, value? **Answer: $
1090 Mn (Present Value of the Horizon Value is $ 755.42
Mn)**

What is the current value of operations for Dozier?
**Answer: $ 788.94 Mn (Enterprise Value);**

ppose Dozier has $10 million in marketable securities, $100
million in debt, and 10 million shares of stock. What is the
intrinsic price per share? **Answer : $ 69.89 per
share**

(in $ Mn) Year 0 Year 1 -20.00 FCF Growth% Year 2 30.00 250% Year 3 40.00 33% Terminal 43.60 9.0% 43.60 1.0000 Free Cash Flows Discounting Factor Discounted Cash Flow Cumulative Discounted Cash Flow -20.00 0.8850 -17.70 -17.70 30.00 0.7831 23.49 5.80 40.00 0.6931 27.72 33.52 CALCULATION OF ENTERPRISE VALUE % 4% Particulars PV of Year 1 to Year 3 Free Cash Fows WACC Terminal Growth Terminal Value Present Value of terminal value ENTERPRISE VALUE 33.52 13.00% 9.0% 1,090 755.42 788.94 96% 100% Less: Debt Add: Cash / Marketable Securities 100.00 10.00 Net Equity Value No.of Shares Outstanding (Qty in Million) Value Per Share (in $) 698.94 10.0 69.89

Free Cash Flow 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 FCF is expected to grow at a
constant 5% rate. Dozier's weighted average cost of capital is WACC
= 17%.
Year
123
Free cash flow ($ millions)-$20$30$40
What is Dozier's horizon value? (Hint: Find the value of all
free cash flows beyond Year 3 discounted back to Year 3.) Enter
your answers...

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 FCF is expected to grow at a
constant 9% rate. Dozier's weighted average cost of capital is WACC
= 16%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's terminal, or horizon, value? (Hint:
Find the value of all free cash flows beyond Year 3 discounted back
to Year 3.)...

Free Cash Flow 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 FCF is expected to grow at a
constant 5% rate. Dozier's weighted average cost of capital is WACC
= 15%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon value? (Hint: Find the value
of all free cash flows beyond Year 3 discounted back to...

Free Cash Flow
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 FCF is expected to grow at a constant 6% rate. Dozier's
weighted average cost of capital is WACC = 13%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's
horizon value? (Hint: Find the value of all free cash
flows beyond Year 3 discounted back to...

Free Cash Flow 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 FCF is expected to grow at a
constant 7% rate. Dozier's weighted average cost of capital is WACC
= 16%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon value? (Hint: Find the value
of all free cash flows beyond Year 3 discounted back to...

Free Cash Flow 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 FCF is expected to grow at a
constant 10% rate. Dozier's weighted average cost of capital is
WACC = 13%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon value? (Hint: Find the value
of all free cash flows beyond Year 3 discounted back to...

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 FCF is expected to grow at a
constant 6% rate. Dozier's weighted average cost of capital is WACC
= 13%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon value? (Hint: Find the value
of all free cash flows beyond Year 3 discounted back to Year 3.)
Round your...

Problem 7-18
Free Cash Flow 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 FCF is expected to grow at a
constant 8% rate. Dozier's weighted average cost of capital is WACC
= 16%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon value? (Hint: Find the value
of all free cash flows beyond Year 3 discounted...

Problem
7-18
Free Cash Flow 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 FCF is expected to grow at a constant 10% rate. Dozier's
weighted average cost of capital is WACC = 13%.
Year
1
2
3
Free cash flow ($ millions)
-$20
$30
$40
What is Dozier's horizon
value? (Hint: Find the value of all free cash flows beyond
Year 3 discounted...

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 FCF is expected to grow at a
constant 9% rate. Dozier's weighted average cost of capital is WACC
= 13%. Year 1 2 3 Free cash flow ($ millions) -$20 $30 $40 What is
Dozier's horizon value? (Hint: Find the value of all free cash
flows beyond Year 3 discounted back to Year 3.)
Round your...

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