9-15 CORPORATE VALUATION Dantzler 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...

9-15 CORPORATE VALUATION Dantzler 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 5% rate. Dantzler’s WACC is 11%.


Year       0     1        2     3
FCF  –$11  $17   $45
($millions)


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?