Question
The forecast for Discomforts free cash flows for next year is provided in the table. Assume that free cash flow is paid at the end
The forecast for Discomforts free cash flows for next year is provided in the table. Assume that free cash flow is paid at the end of each year and we are at the beginning of a year. Last years values are for the year end yesterday. Analysts expect Discomforts cash flow to remain constant at next years level in perpetuity. The WACC for Discomfort is 8%. What is the fair price for Discomforts shares today?
Selected Financial Information Discomfort Inc. ($000s) | ||
| Last Year | Next Year |
Sales | 743,203 | 934,978 |
Depreciation | 13,543 | 20,401 |
EBIT | 90,453 | 119,787 |
Tax Rate, T | 34.8% | 34.8% |
Net Working Capital | -64200 | -61662 |
Net Property and Equipment | 43,850 | 79,356 |
Long-Term Debt | 14,216 | 15,263 |
Shares Outstanding | 20,000 | 20,000 |
Round your answer to the nearest cent.
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