Question
Pearl Corp. is expected to have an EBIT of $2,500,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to
Pearl Corp. is expected to have an EBIT of $2,500,000 next year. Depreciation, the increase in net working capital, and 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. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The companys WACC is 9.1 percent and the tax rate is 22 percent. What is the price per share of the company's stock?
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