You have looked at the current financial statements for J&R Homes, Company. Thecompany has an EBIT of $2,890,000 this year. Depreciation, the increase in net workingcapital, and capital spending were $227,000, $92,000, and $425,000, respectively. Youexpect that over the next five years, EBIT will grow at 18 percent per year, depreciationand capital spending will grow at 23 percent per year, and NWC will grow at 13 percentper year. The company currently has $15.5 million in debt and 415,000 sharesoutstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5percent indefinitely. The company's WACC is 8.9 percent and the tax rate is 23percent. What is the price per share of the company's stock? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Share price

Here,EBIT is $2,890,000Depreciation is $227,000Net Working Capital is $92,000Capital Spending is…

Answered: You have looked at the current…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 9P

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