Derry Corporation is expected to have an EBIT of $2,750,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $210,000, $115,000, and $215,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $16,000,000 in debt and 825,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,000,000 and the appropriate price-sales ratio is 2.6. The company's WACC is 8.9 percent and the tax rate is 21 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price

Derry Corporation is expected to have an EBIT of $2,750,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $210,000, $115,000, and $215,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $16,000,000 in debt and 825,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,000,000 and the appropriate price-sales ratio is 2.6. The company's WACC is 8.9 percent and the tax rate is 21 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price

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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