Question
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows during the next 3 years, after which FCF is
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows during the next 3 years, after which FCF is expected to grow at a constant 7.40% rate. Dozier's WACC is 11.40%.
| Year | 0 | 1 | 2 | 3 |
| FCF ($ millions) |
| 10 | 20 | 30 |
a. What is Dozier's horizon, or continuing, value?
b. What is the firm's value today?
c. Suppose Dozier has $200 million of debt and 100 million shares of stock outstanding. What is your estimate of the current price per share?
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
