Use the table for the question(s) below.

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

4%

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

12%,

$40

million in cash,

$80

million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1?

A.

$22.37

B.

$11.19

C.

$12.43

D.$6.22