Kenneth Cole (KCP) had sales of $503.4 million in 2005. Based on KCP's past profitability and investment needs, you expect EBIT to be 9% of sales, increases in net working capital requirements to be 10% of any increase in sales, and net investment (capital expenditures in excess of depreciation) to be 8% of any increase in sales. KCP has $98.9 million in cash, $3.3 million in debt, 20.3 million shares outstanding, a tax rate of 37%, and a weighted average cost of capital of 11%.

a. Suppose you believe KCP's initial revenue growth rate will be between 4% and 11% (with growth slowing in equal steps to 4% by year 2011). What range of share prices for KCP is consistent with these forecasts?(Select the best choice below.)

A.The range of share prices consistent with these forecasts is from $19.76 to $27.69.

B.The range of share prices consistent with these forecasts is from $20.69 to $25.56.

C.The range of share prices consistent with these forecasts is from $28.55 to $22.42.

D.The range of share prices consistent with these forecasts is from $25.90 to $25.03.

b. Suppose you believe KCP's EBIT margin will be between 7% and 10% of sales. What range of share prices for KCP is consistent with these forecasts (keeping KCP's initial revenue growth at 9% with growth slowing in equal steps to 4% by year 2011)?(Select the best choice below.)

A.The range of share prices consistent with these forecasts is from $28.55 to $22.42.

B.The range of share prices consistent with these forecasts is from $19.76 to $27.69.

C.The range of share prices consistent with these forecasts is from $20.69 to $25.56.

D.The range of share prices consistent with these forecasts is from $25.90 to $25.03.

c. Suppose you believe KCP's weighted average cost of capital is between 10% and 12%.

What range of share prices for KCP is consistent with these forecasts (keeping KCP's initial revenue growth and EBIT margin at 9% with growth slowing in equal steps to 4% by year 2011)?(Select the best choice below.)

A.The range of share prices consistent with these forecasts is from $28.55 to $22.42.

B.The range of share prices consistent with these forecasts is from $25.90 to $25.03.

C.The range of share prices consistent with these forecasts is from $19.76 to $27.69.

D.The range of share prices consistent with these forecasts is from $20.69 to $25.56.

d. What range of share prices is consistent if you vary the estimates as in parts (a), (b), and (c)

simultaneously? That is:

Case 1	Case 2
Revenue growth rate	4%	11%*
EBIT margin	7%	10%
WACC	10%	12 %

(Select the best choice below.)

A. The range of share prices consistent with these forecasts is from $28.55 to $22.42.

B. The range of share prices consistent with these forecasts is from $20.69 to $25.56.

C. The range of share prices consistent with these forecasts is from $25.90 to $25.03.

D. The range of share prices consistent with these forecasts is from $19.76 to $27.69.