Dozier corporation is a fast-growing supplier of office
Question # 00767738
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Updated on: 06/26/2020 04:05 AM Due on: 07/01/2020
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 weighted average cost of capital is WACC = 13%.
|
Year |
|||
|
1 |
2 |
3 |
|
|
Free cash flow ($ millions) |
-$20 |
$30 |
$40 |
a. What is Dozier"s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)
b. What is the current value of operations for Dozier?
c. Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share?
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Rating:
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