Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs)

Question:

Dozier 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 7% rate. Dozier’s WACC is 13%.

Year 1 2 3 + -$20 FCF ($ millions) NA $40 $30

a. What is Dozier’s terminal, or horizon, value?

b. What is the firm’s value today?

c. Suppose Dozier has $100 million of debt and 10 million shares of stock outstanding. What is your estimate of the current price per share?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...