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...

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

FCF ($ millions)

–$11 $17 $45

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 market value today? Assume that Dantzler has zero non-operating

assets.

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?

Sep 12, 2022

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