Potter’s Farms is new entrant into the dairy business. They…
Potter’s Farms is new entrant into the dairy business. They are a fast-growing business that is opening up new locations nationwide. Analysts forecast the following free cash flows (in millions) shown below for the next 3 years, after which FCF is expected to grow at a constant 5% rate. Potter’s WACC is 7.5%. Year 1 2 3 FCF -120 180 305a) What is Potter’s horizon value?b) What is the firm’s market value today?c) Suppose Potter’s has $74.3 million in debt, $37.4 million in preferred stock, and 45 million shares of common stock outstanding. The firm has no non-operating assets since they rent all their locations. What is your estimate of the current price per share?