# Terminal or Horizon Value

13-4

Dozier Corporation is a fast growing supplier of office products. Analysts project the following free cash flows during the next 3 years, after which FCF is expeted to grow at a constant 7% rate. Doziers cost of capital is WACC=13%

Time 1 2 3

FCF -$20 $30 $40

a) What is Dozier's terminal, or horizon value?

b) What is the current value of operations for Dozier?

c) Suppose Dozier has $10 million in marketable securities, $100 million in debt and 10 million shares of stock. What is the price per share?

https://brainmass.com/business/finance/terminal-or-horizon-value-196576

#### Solution Preview

a. Terminal Value = FCF in year 4/(WACC-growth Rate)

FCF in year 4=FCF3 X (1+g) = 40X(1+7%) = 42.8

WACC=13%

Growth Rate=7%

Terminal Value in ...

#### Solution Summary

The solution explains how to calculate Dozier's terminal or horizon value, value of operations & price per share