You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,650,000 this year. Depreciation, the increase in net working capital, and capital spending were $315,000, $157,000, and $565,000, 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 $26,500,000 in debt and 470,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.6 percent, indefinitely. The company's WACC is 9.75 percent and the tax rate is 24 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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You have looked at the current financial statements for J&R Homes,
Company. The company has an EBIT of $4,650,000 this year.
Depreciation, the increase in net working capital, and capital spending
were $315,000, $157,000, and $565,000, 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 $26,500,000 in debt and
470,000 shares outstanding. After Year 5, the adjusted cash flow from
assets is expected to grow at 3.6 percent, indefinitely. The company's
WACC is 9.75 percent and the tax rate is 24 percent. What is the price
per share of the company's stock?
Note: not round intermediate calculations and round your answer
to 2 decimal places, e.g., 32.16.
Share price
Transcribed Image Text:You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,650,000 this year. Depreciation, the increase in net working capital, and capital spending were $315,000, $157,000, and $565,000, 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 $26,500,000 in debt and 470,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.6 percent, indefinitely. The company's WACC is 9.75 percent and the tax rate is 24 percent. What is the price per share of the company's stock? Note: not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price
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