Question

y Corporate valuation 9 search thi Video Excel Online Structured Activity: Corporate valuation Ou r Corporation is a fast-growing upper om products Analysts project the following free cash flows (FCFS) during the next 3 years after which FCF expected to grow at a constant 8% rate. Dantzler's WACC is 16% FCF (5 miliona) $16 $35 The has been collected in the Microsoft Excel O ne Te below. Open the spreadsheet and perform the required analysis to answer the questions below Open spreadsheet a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to y decimal places. Enter your answer m ons. For example, an answer of $13,550,000 should be entered as 13.55 million 3.) Round your answer to two b. What is the firm's value today? Round your answer to two decal places. Enter your answer in milions. For example, an answer of $13.550.000 should be entered as 13.55. Dont round your intermediate calculations million c. Suppose Dartier has $139 million of debt and 16 milion shares of stock outstanding. What is your estimate of the current once per Share Round your answer to

Answer 1

FCF Growth Rate WACC

a.

Horizon Value = FCF3 *(1+Growth Rate)/(WACC - Growth Rate) = 32*(1+8%)/(16%-8%) = $432 Million

b.

Net Present Value = -22 + (16/1.16)+(32+432)/(1.16^2) = $336.62 Million

c.

Debt = $139 Million

Outstanding no of shares = 14 Million

Current Market Price =(NPV - Debt) / Outstanding no of shares = (336.62 - 139)/14 = $14.12