WACC= | 10.00% | ||||||
Year | Previous year FCF | FCF growth rate | FCF current year | a. Horizon value | Total Value | Discount factor | Discounted value |
1 | 0 | 0.00% | -24 | -24 | 1.1 | -21.8182 | |
2 | -24 | 0.00% | 30 | 30 | 1.21 | 24.79339 | |
3 | 30 | 0.00% | 36 | a. 1944 | 1980 | 1.331 | 1487.60331 |
Long term growth rate (given)= | 8.00% | b. Value of Enterprise = | Sum of discounted value = | 1490.58 | |||
Where | |||||||
Total value = FCF + horizon value (only for last year) | |||||||
Horizon value = FCF current year 3 *(1+long term growth rate)/( WACC-long term growth rate) | |||||||
Discount factor=(1+ WACC)^corresponding period | |||||||
Discounted value=total value/discount factor |
c
Enterprise value = Equity value+ MV of debt |
1490.58 = Equity value+137.2 |
Equity value = 1353.38 |
share price = equity value/number of shares |
share price = 1353.38/27 |
share price = 50.13 |
9.13 Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash...
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