**Dantzler Corporation Financial Analysis** Dantzler Corporation, a fast-growing supplier of office products, is projected to have the following free cash flows (FCFs) in the next three years. After this period, the FCFs are expected to grow at a constant rate of 7%. Dantzler’s Weighted Average Cost of Capital (WACC) is 13%. **Yearly Free Cash Flows:** - **Year 0:** -$18 million - **Year 1:** $33 million - **Year 2:** $43 million - **Year 3:** FCF continues to grow **Questions:** a. **What is Dantzler's horizon, or continuing, value?** - **Hint:** Calculate the value of all free cash flows beyond Year 3 discounted back to Year 3. Provide your answer in millions, rounded to two decimal places. b. **What is the firm's market value today?** - Assume Dantzler has zero non-operating assets. Enter your answer in millions, rounded to two decimal places. c. **Estimate the current price per share, given:** - Dantzler has $109 million of debt and 11 million shares of stock outstanding. Write out your answer completely, rounded to the nearest cent. **Graph/Diagram Explanation:** The diagram represents a timeline from Year 0 to Year 3, displaying the corresponding free cash flows for each year. These values illustrate Dantzler's projected financial performance over the given period.
**Dantzler Corporation Financial Analysis** Dantzler Corporation, a fast-growing supplier of office products, is projected to have the following free cash flows (FCFs) in the next three years. After this period, the FCFs are expected to grow at a constant rate of 7%. Dantzler’s Weighted Average Cost of Capital (WACC) is 13%. **Yearly Free Cash Flows:** - **Year 0:** -$18 million - **Year 1:** $33 million - **Year 2:** $43 million - **Year 3:** FCF continues to grow **Questions:** a. **What is Dantzler's horizon, or continuing, value?** - **Hint:** Calculate the value of all free cash flows beyond Year 3 discounted back to Year 3. Provide your answer in millions, rounded to two decimal places. b. **What is the firm's market value today?** - Assume Dantzler has zero non-operating assets. Enter your answer in millions, rounded to two decimal places. c. **Estimate the current price per share, given:** - Dantzler has $109 million of debt and 11 million shares of stock outstanding. Write out your answer completely, rounded to the nearest cent. **Graph/Diagram Explanation:** The diagram represents a timeline from Year 0 to Year 3, displaying the corresponding free cash flows for each year. These values illustrate Dantzler's projected financial performance over the given period.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:**Dantzler Corporation Financial Analysis**
Dantzler Corporation, a fast-growing supplier of office products, is projected to have the following free cash flows (FCFs) in the next three years. After this period, the FCFs are expected to grow at a constant rate of 7%. Dantzler’s Weighted Average Cost of Capital (WACC) is 13%.
**Yearly Free Cash Flows:**
- **Year 0:** -$18 million
- **Year 1:** $33 million
- **Year 2:** $43 million
- **Year 3:** FCF continues to grow
**Questions:**
a. **What is Dantzler's horizon, or continuing, value?**
- **Hint:** Calculate the value of all free cash flows beyond Year 3 discounted back to Year 3. Provide your answer in millions, rounded to two decimal places.
b. **What is the firm's market value today?**
- Assume Dantzler has zero non-operating assets. Enter your answer in millions, rounded to two decimal places.
c. **Estimate the current price per share, given:**
- Dantzler has $109 million of debt and 11 million shares of stock outstanding. Write out your answer completely, rounded to the nearest cent.
**Graph/Diagram Explanation:**
The diagram represents a timeline from Year 0 to Year 3, displaying the corresponding free cash flows for each year. These values illustrate Dantzler's projected financial performance over the given period.
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