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 10% rate. Dozier’s weighted average cost of capital is WACC = 13%.

Year | 1 | 2 | 3 |
---|---|---|---|

Free cash flow ($ millions) | -$20 | $30 | $40 |

a. What is Dozier’s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)

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 intrinsic price per share?