Question: This question uses the same data as the previous question, shown below. You have been tasked with building a stand-alone DCF valuation for Milner Beverages,

This question uses the same data as the previous question, shown below.

You have been tasked with building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using the unlevered two-stage approach. You calculate the following:

$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered free cash flow 110.0 120.0 150.0 170.0 200.0 250.0 280.0

In addition, you calculate the following:

WACC = 8.00%

Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%

Using the mid-year convention, calculate the enterprise value as of December 31, 2016. Assume all cash flows, including perpetuity cash flows, occur midyear.

$4,110.10

$4,306.90

$4,438.90

$6,709.30

$6,717.9

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