Question
Jess Co. expects to have sales of 138,477 next year, costs of 92,785, and net investment of 13,565. Each of these values is expected to
Jess Co. expects to have sales of 138,477 next year, costs of 92,785, and net investment of 13,565. Each of these values is expected to grow at 15% for the next five years (T1 to T5), and then at 2% forever thereafter (Starting T6). The firm has 7,500 shares outstanding and investors require a 10% rate of return on their investment. Lastly, the firm has a 30% corporate tax rate. The comparable P/E for Jess Co. equals 19.5. Calculate the price per share using the P/E Multiple Approach for the terminal value. (Round to 3 decimals)
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