Q 9-10.

• Dozier Corporation is a fast-growing supplier of office products. Analysts project the following FCF during the next 3 years, after which FCF is expected grow at a constant 8 percent. Doziers WACC = 13%.

Time YEAR 1 2 3 4

FCF (million) 20 30 40 8% growth

9. What is Doziers terminal, or horizon value (value of operation at time 3 for constant part)?

10. What is the current value of operations (present value of all cash flow)?

11. Using the corporate valuation model, the value of a companys operations is $950 million. The companys balance sheet shows $50 million in short-term investment. The company also has 150 m in accounts payable, $200 m in note payable, $300 m in long-term debt, $ 240 m in common stock and 160 m in retain earnings. What is your best estimate for the market value of equity per share if total number of shares outstanding = 10 million?

WACC = W_d* r_d (1-T) + W_ps*r_ps + Ws * r_s Break even= Retained earnings / Ws

Vop = FCF1/(WACC g ), V = Vop+Vnop, MVE = V Vps Vdebt, P = MVE/#shares