Problem 7-18 Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts...

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Problem 7-18 Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the

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Answer 1

Answer #1

a.

Horizon Value = 40(1.08)/(0.16 - 0.08)

Horizon Value = $540 million

b.

Value of Operations = -20/(1.16) + 30/(1.16)² + (540 + 40)/(1.16)³

Value of Operations = $376.63 million

c.

Intrinsic Value per Share = (376.63 - 10 - 100)/10

Intrinsic Value per Share = $26.66

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Answer 2

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