Ernie Manufacturing has projected sales of $100.1 million next year. Costs are expected to be $90 million and net investment is expected to be $5 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent where it will remain. There are 5.5 million shares of stock outstanding. Investors require a return of 13 percent and the corporate tax rate is 40 percent. What is your estimate of the current stock price?

Answer choices :

a) $0.99

b) $2.98

C) $3.24

d) $3.06

**NOTE** please show full explanation with formula so i can understand better how to work this problem for future reference