Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 18P: Free Cash Flow Valuation
Dozier Corporation is a fast-growing supplier of office products. Analysts...
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Question
Please solve parts A, B, AND C!
![**Excel Online Structured Activity: Corporate Valuation**
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 5% rate. Dantzler's Weighted Average Cost of Capital (WACC) is 13%.
### Cash Flow Projection:
- **Year 0**: No cash flow
- **Year 1**: -$15 million
- **Year 2**: $22 million
- **Year 3**: $53 million
The data has been collected in the Microsoft Excel Online file provided. Open the spreadsheet and perform the required analysis to answer the questions below.
[Open Spreadsheet]
### Analysis Questions:
**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.
**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 entered as 13.55. Do not round your intermediate calculations.
**c. Suppose Dantzler has $86 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 decimal places. Write out your answer completely. For example, 0.00025 million should be entered as 250.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3d9d2769-642e-4766-9ef4-6b4ef452117b%2Fa1fbf243-f3fe-4684-9151-c4d3427a97e5%2F95ko3oa_processed.png&w=3840&q=75)
Transcribed Image Text:**Excel Online Structured Activity: Corporate Valuation**
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 5% rate. Dantzler's Weighted Average Cost of Capital (WACC) is 13%.
### Cash Flow Projection:
- **Year 0**: No cash flow
- **Year 1**: -$15 million
- **Year 2**: $22 million
- **Year 3**: $53 million
The data has been collected in the Microsoft Excel Online file provided. Open the spreadsheet and perform the required analysis to answer the questions below.
[Open Spreadsheet]
### Analysis Questions:
**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.
**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 entered as 13.55. Do not round your intermediate calculations.
**c. Suppose Dantzler has $86 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 decimal places. Write out your answer completely. For example, 0.00025 million should be entered as 250.
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