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Discounted Cash Flow Valuation: At the beginning of fiscal year 2021, an analyst made the following forecast for start-up company Drones Corp., the, for 200212024
Discounted Cash Flow Valuation: At the beginning of fiscal year 2021, an analyst made the following forecast for start-up company Drones Corp., the, for 200212024 (in millions of dollars): 2021 2022 2023 2024 2,057 2,095 2,107 Cash flow from operations Cash investment in operations 2,014 (300) (380) (442) (470) Drones Corp. reported $6,192 million in short-term and long-term debt at the end of 2020 but very little in interest- bearing debt assets. Use a required return of 9 percent to calculate both the enterprise value and equity value for Drone Corp. at the beginning of 2021 given that: a. Free cash flow will grow at 3 percent (terminal value) per year after 2024. Drones Corp. had 369 million shares outstanding at the end of 2020, priced at $47 per share. Calculate value per share given the free cash flow table above with terminal growth projected to be 3% and the WACC at 9%
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