Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pearl Corp. is expected to have an EBIT of $2,500,000 next year. Depreciation, the increase in net working capital, and net capital spending are expected

image text in transcribed
Pearl Corp. is expected to have an EBIT of $2,500,000 next year. Depreciation, the increase in net working capital, and net capital spending are expected to be $160,000, $110,000, and $150,000, respectively. All are expected to grow at 15 percent per year for four years. The company currently has $13,000,000 in debt and 850,000 shares outstanding. At Year 5, you believe that the company's sales will be $17,930,000 and the appropriate price-sales ratio is 2.7. The company's WACC is 9.1 percent and the tax rate is 22 percent What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Healthcare Finance An Introduction To Accounting And Financial Management

Authors: Louis C. Gapenski

5th Edition

1567934250, 978-1567934250

More Books

Students also viewed these Finance questions