Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Derry Corporation is expected to have an EBIT of $ 2 , 2 0 0 , 0 0 0 next year. Increases in depreciation, the

Derry Corporation is expected to have an EBIT of $2,200,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $95,000, and $135,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $11,500,000 in debt and 950,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The companys WACC is 8.7 percent and the tax rate is 24 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_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

Algorithmic Finance A Companion To Data Science

Authors: Christopher Hian-ann Ting

1st Edition

9811238308, 978-9811238307

More Books

Students also viewed these Finance questions

Question

What influences peoples choice of values?

Answered: 1 week ago

Question

2. What are the prospects for these occupations?

Answered: 1 week ago