Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Derry Corporation is expected to have an EBIT of $ 3 , 3 5 0 , 0 0 0 next year. Depreciation, the increase in

Derry Corporation is expected to have an EBIT of $3,350,000 next year. Depreciation, the increase in net working capital, and capital
spending are expected to be $270,000,$175,000, and $275,000, respectively. All are expected to grow at 20 percent per year for
four years. The company currently has $22,000,000 in debt and 885,000 shares outstanding. At Year 5, you believe that the
company's sales will be $29,200,000 and the appropriate price-sales ratio is 2.7. The company's WACC is 9.1 percent and the tax rate
is 23 percent. What is the price per share of the company's stock?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Income Distribution Volume 2B

Authors: Anthony B. Atkinson, Francois Bourguignon

1st Edition

0444594299, 978-0444594297

More Books

Students also viewed these Finance questions