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Value the following company. Sales forecast for 2021 is $150 million, and sales are projected to grow by 20% each year in the forecast period
Value the following company. Sales forecast for 2021 is $150 million, and sales are projected to grow by 20% each year in the forecast period through 2025. Sales growth in the perpetuity period is projected to be 7% annually. Sales for 2020 were $70 million. EBIT margin is 65%. The tax rate is 40% in the forecast and perpetuity periods. Accounts Receivables were $10 million, Inventory was $15 million, and Accounts Payable were $10 million, as of 12/31/2020. CAPX is $10 million in 2021, and will increase by $5 million per year until 2025. Depreciation will be $20 million in 2021 and will increase by 20% annually throughout the forecast period. Cost of debt is 9% and debt over asset ratio (leverage) is 40%. Risk-free rate is 5%, risk premium is 8%, and size-related add-on premium is 4%. Assume that beta is 1.7. Assume plowback ratio k is 0.3. Cash totals $200 million, and Long-Term Debt is $100 million, as of 12/31/20. There are 100 million common shares outstanding. What is the stock price
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