Question
Pearl Corp. is expected to have an EBIT of $2,100,000 next year. Depreciation, the increase in net working capital, and net capital spending are expected
Pearl Corp. is expected to have an EBIT of $2,100,000 next year. Depreciation, the increase in net working capital, and net capital spending are expected to be $160,000, $90,000, and $130,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $11,000,000 in debt and 900,000 shares outstanding. At Year 5, you believe that the company's sales will be $16,130,000 and the appropriate price-sales ratio is 2.3. The companys WACC is 8.6 percent and the tax rate is 23 percent. What is the price per share of the company's stock?
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