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 6% rate. Dantzler's WACC is 15%. Year 0 1 2 3 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ...... FCF ($ millions) - $25 $22 $48 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 $178 million of debt and 21 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 completely. For example, 0.00025 million should be entered as 250.

Answer 1

Year	FCF
1	25	$ Million
2	22	$ Million
3	48	$ Million
4	50.88	$ Million
5	53.93	$ Million
6	57.17	$ Million
and so on
	FCF after 3 year regular at 6%
	Then upto perpetuity
	Wacc = 15%
	Total cash flow from year 4 to end is				FCF/(Wacc-g)		PV Factor @ 15%		PV
				4th to end	533.3333	$ million	0.571753		304.9351
				1	25	$ million	0.869565		21.73913	$ million
				2	22	$ million	0.756144		16.63516	$ million
				3	48	$ million	0.657516		31.56078	$ million
						Total			374.8701	$ million
					less	Debt			178	$ million
						Equity			196.8701	$ million
						shares			21	million
						Current Value of share		=	9.374768	$