J.W Enterprises sells coffee cups. Gross revenues last year were $8.7 million, and total costs were $4.4 million. J.W Enterprises has .6 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 5 percent per year. J.W Enterprises pays no income taxes. All earnings are paid out as dividends. (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

a.	If the appropriate discount rate is 15 percent and all cash flows are received at years end, what is the price per share of J.W Enterprise stock?

Price per share

$

b.

J. W Enterprise has decided to produce drinking straws. The project requires an immediate outlay of $18.0 million. In one year, another outlay of $7.0 million will be needed. The year after that, earnings will increase by $5.2 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken?

Price per share

$