Question
You are an analyst for Abc corp that made last year 2, 000,000 in net income last year and has 1,000,000 shares outside standing .management
You are an analyst for Abc corp that made last year 2, 000,000 in net income last year and has 1,000,000 shares outside standing .management has given you guidance that they expect net income to increase 5% for the next 5 years and then 3% thereafter and further that they expect shares outstanding to remain the same .You agree with management's expectations and have calculated their WACC to be 12% .The stock is currently trading at $ per share.Do you agree with the evaluation and what then is your buy /sell /hold recommendation? what is your calculated P/E ratio ? if the company has 20,000 ,000 in debt and using your stock valuation ,what would the company's enterprise value be?
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