1)
Year 4 FCF = 43 (1 + 8%) = 46.44
Horizon value = FCF4 / required rate - growth rate
Horizon value = 46.44 / 0.1 - 0.08
Horizon value = 46.44 / 0.02
Horizon value = $2,322.00 million
2)
Firm's value = Present value of cash flows
Firm's value = -15 / (1 + 0.1)1 + 33 / (1 + 0.1)2 + 43 / (1 + 0.1)3 + 2,322 / (1 + 0.1)3
Firm's value = $1,790.50 million
3)
Current share price = (1,790.5 - 103) / 39
Current share price = $43.27
Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows...
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