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# Dozier's terminal, or horizontal value

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Brook's Enterprises has never paid a dividend. Free cash flow is projected to be \$80,000 and \$100,000 for the next 2 years, respectively, and after the second year it is expected to grow at a constant rate of 8%. The company's weighted average cost of capital is WACC= 12%

a) What is the terminal, or horizontal, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2)
b) Calculate the value of Brook's operations.

Dozier 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 7% rate. Dozier's cost of capital is WACC=13%

Time 1 2 3
Free Cash Flow -\$20 \$30 \$40

a) What is Dozier's terminal, or horizontal 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?