Company Badger

Outstanding shares = 20,000

WACC = 10.0%

Debt = $250,000

Growth rate after yr. 4 = 4.0%

Bond price = $1,300

Next expected dividend = $2.00

Year cash flows:

Year 1 = $10,000

Year 2 = $25,000

Year 3 = $35,000

Year 4 = $50,000

In using the Discounted Cash Flow model for valuing a stock, we start by determining the present value of all the future free cash flows - calculate the present value of years' 5 thru forever cash flows for Company Badger (round to the nearest dollar - ex: 123).