Question

nd Study Tools Dantzler Corporation a fast growing suppler 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 brate Dante's WACC is 12% A-Z Ters D 2 3 Year tions FCF (S scess Tips millions) $7 $25 $42 cess Tips The data has been colected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet ack a. What is Dander's honzon, or continung, value? (ne: Find the value of a free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in milions. For example, an answer of $13,550,000 should be entered as 13.55 $ mikon b. What is the firm's value today? Round your answer to two decimal places. Enter your answer in milions. For example, an answer of $13,550,000 should be entered as 13.55. Do not found your intermediate cakulations $ milion Suppose Dantzler has $117 milion of debt and 9 milion shares of stock outstanding. What is your estimate of the current price per share? Round your answer to two decimal places. Write out your answer completely. For example, 0.00025 milon should be entered as 250. $

Answer 1

a.

Continuing value=(42*(1+6%))/(12%-6%)=742 million

b.

firm value

=-7/(1+12%)^1+25/(1+12%)^2+42/(1+12%)^3+((42*(1+6%))/(12%-6%))/(1+12%)^3

=571.72 million

c.

per share=(571.72-117)/9=50.52