Kenneth Cole (KCP) had sales of $518.0 million in 2005. Based on KCP's past profitabilty and invertment needs, you expect EBrT to be 9% of sales, increases in net working capisy requirements to be 10% of any increase in sales, and net investment (capital expendituros in excess of depreciabion) to be 8% of any increase in saies. KCP has $100milion in cash, $3 milian in debt, 21 milion shares outstanding. a tax rale of 37%, and a weighted average cost of capitat of 11%. a. Suppose you beleve KCP's initial revenue growth rate wil 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? b. Suppose you beleve KCP's EBIT margin will be between 7% and 10% of asles. What range of share prices for KCP is consistent with these forocass (keeping KCPS initial revenye groath at S: With growth slowing in ocual steps to 4% by year 2011) ? c. Suppose you believe KCPs weighted averege cost of capita is between 10% and 12%. What range of share prices for KCP is consistont with these forecasts (keeping kCPY intial revesue growth and Eart margin at 9% with growth slowing in equal sieps to 4% by year 20111 ? d. What range of share prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously? That is (Click on the folcwing icon e. in ordar to copy its contents inso a spreadsheet) a. Suppose you believe KCPr s initial rewenue growth rato will be between 4% and 11% (with growth slowing in equal alops to 4% by year 2011). What range of share prices for iCCP is consistent with these forecasts? (Select the best chaice below) A. The range of share prices coovistent with these forecasts is trom $22.8610$25.70 B. The range of share prices consistent with these forecasts is from $19.59 to $27.48. C. The range of share prices consistent weh these forocasts is from $16.54 to $3262. D. The range of share prices consistent wath these foeceasts is from 522.24 to $22.34. Kenneth Cole (KCP) had sales of $518.0 million in 2005. Based on KCP's past profitabilty and invertment needs, you expect EBrT to be 9% of sales, increases in net working capisy requirements to be 10% of any increase in sales, and net investment (capital expendituros in excess of depreciabion) to be 8% of any increase in saies. KCP has $100milion in cash, $3 milian in debt, 21 milion shares outstanding. a tax rale of 37%, and a weighted average cost of capitat of 11%. a. Suppose you beleve KCP's initial revenue growth rate wil 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? b. Suppose you beleve KCP's EBIT margin will be between 7% and 10% of asles. What range of share prices for KCP is consistent with these forocass (keeping KCPS initial revenye groath at S: With growth slowing in ocual steps to 4% by year 2011) ? c. Suppose you believe KCPs weighted averege cost of capita is between 10% and 12%. What range of share prices for KCP is consistont with these forecasts (keeping kCPY intial revesue growth and Eart margin at 9% with growth slowing in equal sieps to 4% by year 20111 ? d. What range of share prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously? That is (Click on the folcwing icon e. in ordar to copy its contents inso a spreadsheet) a. Suppose you believe KCPr s initial rewenue growth rato will be between 4% and 11% (with growth slowing in equal alops to 4% by year 2011). What range of share prices for iCCP is consistent with these forecasts? (Select the best chaice below) A. The range of share prices coovistent with these forecasts is trom $22.8610$25.70 B. The range of share prices consistent with these forecasts is from $19.59 to $27.48. C. The range of share prices consistent weh these forocasts is from $16.54 to $3262. D. The range of share prices consistent wath these foeceasts is from 522.24 to $22.34
