Question

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 $13,550,000 should be entered as 13.55. do not round intermediate calculations. round your answer to two decimal places.

Answer 1

The Dantzler's horizon, or continuing, value refers to the value of all free cash flows beyond year 3, discounted back to year 3. To calculate this, we need to find the present value of the cash flows received in years 4 and beyond, and then sum them up.

Step-by-step explanation:

The Dantzler's horizon, or continuing, value refers to the value of all free cash flows beyond year 3, discounted back to year 3. To calculate this, we need to find the present value of the cash flows received in years 4 and beyond, and then sum them up. Let's assume a discount rate of 15%. Using the formula for present value, we can calculate the present value of each cash flow and then sum them up:

Year 4: $30 million / (1 + 0.15)³ = $20.04 million

Year 5: $35 million / (1 + 0.15)⁴ = $20.53 million

Year 6: $40 million / (1 + 0.15)⁵ = $20.94 million

Adding up these values, we get $61.51 million. Therefore, the Dantzler's horizon, or continuing, value is $61.51 million (rounded to two decimal places).