2. 24. Adjusted cash flow from assets [LO 14.3] Bullaburra Furniture Company is expected to have an...

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2. 24.

Adjusted cash flow from assets [LO 14.3] Bullaburra Furniture Company is expected to have an EBIT of $1.8 million next year.

Depreciation, the increase in net working capital and capital spending are expected to be $155 000, $75 000 and $115 000, respectively. All are expected to grow at 18 per cent per year for four years. The company currently has $9.5 million in debt and 750 000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3 per cent indefinitely. The company’s WACC is 8.5 per cent and the tax rate is 30 per cent. What is the price per share of the company’s shares?

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