Homework Answers
FCF expected to be in year 5 is $25.00 millions.After year 5 FCF growth rate is expected to be a constant 6.5%
Year 6 cash flows = $ 25 million * (1 + 0.065) = $ 26.625 millions
Horizon value at end of the year 5 = year 6 cash flows / (WACC - g ) = $ 26.625 / (0.12 - 0.065) = $484.09091 Millions
Horizon value at end of year 5 = $ 484 million
option D is correct.
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Dantzler Corporation is a fast-growing supplier 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 8% rate. Dantzler's WACC is 11%.
Year
0
1
2
3
.......
.......
.......
.......
.......
.......
.......
.......
FCF ($ millions)
.......
.......
.......
.......
.......
.......
.......
......
- $19
$26
$35
a. What is Dantzler's horizon, or continuing, value?
(Hint: Find the value of all...
Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows...
Dantzler Corporation is a fast-growing supplier 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 8% rate. Dantzler's WACC is 11%. FCF (5 millions) - $17 $25 $39 a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Enter your answer in millions. For example, an answer of...
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Dantzler Corporation is a fast-growing supplier of office
products. Analysts project the following free cash flows (FCFs)
during the next 3 years, after which FCF is expected to grow at a
constant 8% rate. Dantzler's WACC is 11%.
Year
0
1
2
3
.......
.......
.......
.......
.......
.......
.......
.......
FCF ($ millions)
.......
.......
.......
.......
.......
.......
.......
......
- $19
$26
$35
a. What is Dantzler's horizon, or continuing, value?
(Hint: Find the value of all...
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