Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Derry Corporation is expected to have an EBIT of $2,500,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are

Derry Corporation is expected to have an EBIT of $2,500,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $110,000, and $150,000, respectively. All are expected to grow at 15 percent per year for four years. The company currently has $13,000,000 in debt and 850,000 shares outstanding. At Year 5, you believe that the company's sales will be $17,930,000 and the appropriate price-sales ratio is 2.7. The companys WACC is 9.1 percent and the tax rate is 22 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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

Step: 3

blur-text-image

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

More Books

Students also viewed these Finance questions

Question

What is Foreign Policy?

Answered: 1 week ago

Question

Under a wider scope discuss socialism in Tanzania.

Answered: 1 week ago