Derry Corporation is expected to have an EBIT of $3,800,000 next year. Increases in depreciation, the increase in net wo
Posted: Mon May 02, 2022 9:34 am
Derry Corporation is expected to have an EBIT of $3,800,000 next
year. Increases in depreciation, the increase in net working
capital, and capital spending are expected to be $160,000,
$175,000, and $215,000, respectively. All are expected to grow at
19 percent per year for four years. The company currently has
$19,500,000 in debt and 1,750,000 shares outstanding. After Year 5,
the adjusted cash flow from assets is expected to grow at 3 percent
indefinitely. The company’s WACC is 8.8 percent and the tax rate is
25 percent. What is the price per share of the company's
stock?
year. Increases in depreciation, the increase in net working
capital, and capital spending are expected to be $160,000,
$175,000, and $215,000, respectively. All are expected to grow at
19 percent per year for four years. The company currently has
$19,500,000 in debt and 1,750,000 shares outstanding. After Year 5,
the adjusted cash flow from assets is expected to grow at 3 percent
indefinitely. The company’s WACC is 8.8 percent and the tax rate is
25 percent. What is the price per share of the company's
stock?