Use the table for the question(s) below.

Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of

6%

in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of

10%,

$40

million in cash,

$80

million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase?

A.

$6.08

B.

$10.63

C.

$18.23

D. $7.29