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
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 4% rate. Dantzler's WACC is 14%.FCF ($ millions)
Year 1: $8 Year 2: $27 Year 3: $41
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.
B. What is the firm's value today? Round your answer to two decimal places. Enter your answer in millions.
C. Suppose Dantzler has $121 million of debt and 18 million shares of stock outstanding. What is your estimate of the current price per share?
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