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

Question:

Dantzler 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 5% rate. Dantzler€™s WACC is 11%.

Year + + FCF ($ millions) $45 $17 -$11 2.

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.)
b. What is the firm€™s value today?
c. Suppose Dantzler has $112.60 million of debt and 25 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...