What is the market value of MC Inc today?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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What is the market value of MC Inc today? 

What is the stock price of MC Inc today?

In 2018, MC Inc. has an EBIT of $125M, and $15M of depreciation. The tax rate is 40%. The net capital spending is $20M. The
net working capital is $20M in 2018, and $40M in 2017. The predicted growth rate is 10% in the next three years. Starting in
the fourth year, the growth rate will be 5% indefinitely. The firm has $40OM (market value) in debt, and 100M shares
outstanding. Beta of MC Inc. is 1.5. Market risk premium is 7%. Risk free rate is 5%. The WACC of the firm is 10%.
Transcribed Image Text:In 2018, MC Inc. has an EBIT of $125M, and $15M of depreciation. The tax rate is 40%. The net capital spending is $20M. The net working capital is $20M in 2018, and $40M in 2017. The predicted growth rate is 10% in the next three years. Starting in the fourth year, the growth rate will be 5% indefinitely. The firm has $40OM (market value) in debt, and 100M shares outstanding. Beta of MC Inc. is 1.5. Market risk premium is 7%. Risk free rate is 5%. The WACC of the firm is 10%.
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