Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please provide excel formulas Derry Corp. is expected to have an EBIT of $2.1 million next year. Increases in depreciation, the increase in net working
Please provide excel formulas
Derry Corp. is expected to have an EBIT of $2.1 million next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $165,000,$80,000, and $120,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $10.4 million in debt and 750,000 shares outstanding. The company's WACC is 8.5 percent and the tax rate is 21 percent. you decide to calculate the terminal value of the company with the price-sales ratio. You believe that Year 5 sales will be $23.7 million and the appropriate price-sales ratio is 2.9 . What is the price per share of the company's stock? Input Area: EBIT Depreciation Change in NWC Capital spending Increase per year EBIT Depreciation Change in NWC Capital spending Value of debt Shares outstanding Terminal growth rate WACC Tax rate Year 5 sales Price-sales ratio $2,100,000 $165,000 $80,000 $120,000 18% 18% 18% 18% $10,400,000 750,000 3% 8.50% 21% $23,700,000 2.9 (Use cells A6 to B21 from the given information to complete this question. You must use the built-in Excel function to answer this question.) \begin{tabular}{|l|l|l|l|l|} \hline built-in Excel function to answer this question.) \\ \hline Output Area: \\ \hline EBIT \\ Depreciation \\ Taxes* \\ Capital spending \\ Change in NWC \\ ACFA \\ Year 5 company value \\ Company value today \\ Value of equity \\ Price per share \end{tabular}Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started