CORPORATE 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 WACC is 13%.

a. What is Dozier’s horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)

b. What is the firm’s value today?

c. Suppose Dozier has $100 million of debt and 10 million shares of stock outstanding.
What is your estimate of the current price per share?AppendixLO1

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Year 1 2 3 + + FCF ($ millions) -$20 $30 $40