Amazon Inc. is a fast-growing company. 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. Amazon’s cost of capital is WACC = 13%.
Time
1
2
3
Free cash flow ($ millions)
-$20
$30
$40

What is Amazon’s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)
What is the current value of operations for Amazon?
Suppose Amazon has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the price per share?