Problem 6 32 Stock Valuation and Cash Flows Maslyn Manufacturing has projected sales of $147 million next year Costs are expected to be $82 million, and net investment is expected to be $16 million Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely There are 6 5 million shares of stock outstanding and investors require a return of 14 percent on the companys stock The corporate tax rate is 35 percent a What is your estimate of the current stock price (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) Share price $ b Suppose instead that you estimate the terminal value of the company using a PE multiple The industry PE multiple is 13 What is your new estimate of the companys stock price (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) Share price $ Problem 6 32 Stock Valuation and Cash Flows Maslyn Manufacturing has projected sales of $147 million next year Costs are expected to be $82 million, and net investment is expected to be $16 million Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely There are 6 5 million shares of stock outstanding and investors require a return of 14 percent on the company's stock The corporate tax rate is 35 percent a What is your estimate of the current stock price (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) Share price b Suppose instead that you estimate the terminal value of the company using a PE multiple The industry PE multiple is 13 What is your new estimate of the company's stock price (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) Share price ta

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Problem 6-32 Stock Valuation and Cash Flows Maslyn Manufacturing has projected sales of $147 million next year. Costs are expected to be $82 million, and

Problem 6-32 Stock Valuation and Cash Flows

Maslyn Manufacturing has projected sales of $147 million next year. Costs are expected to be $82 million, and net investment is expected to be $16 million. Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely. There are 6.5 million shares of stock outstanding and investors require a return of 14 percent on the companys stock. The corporate tax rate is 35 percent. a. What is your estimate of the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price $ b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 13. What is your new estimate of the companys stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price $

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Problem 6-32 Stock Valuation and Cash Flows Maslyn Manufacturing has projected sales of $147 million next year. Costs are expected to be $82 million, and net investment is expected to be $16 million. Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely. There are 6.5 million shares of stock outstanding and investors require a return of 14 percent on the company's stock. The corporate tax rate is 35 percent. a. What is your estimate of the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 13. What is your new estimate of the company's stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price ta