Question
You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,750,000 this year. Depreciation, the increase in
You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,750,000 this year. Depreciation, the increase in net working capital, and capital spending were $270,000, $130,000, and $520,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $22,000,000 in debt and 425,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.25 percent, indefinitely. The companys WACC is 9.3 percent and the tax rate is 25 percent. What is the price per share of the company's stock?
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