Derry Corporation is expected to have an EBIT of $3,350,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $270,000, $175,000, and $275,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $22,000,000 in debt and 885,000 shares outstanding. At Year 5, you believe that the company's sales will be $29,200,000 and the appropriate price-sales ratio is 2.7. The company's WACC is 9.1 percent and the tax rate is 23 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. > Answer is complete but not entirely correct. Share price $ 48.68X
Derry Corporation is expected to have an EBIT of $3,350,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $270,000, $175,000, and $275,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $22,000,000 in debt and 885,000 shares outstanding. At Year 5, you believe that the company's sales will be $29,200,000 and the appropriate price-sales ratio is 2.7. The company's WACC is 9.1 percent and the tax rate is 23 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. > Answer is complete but not entirely correct. Share price $ 48.68X
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
Section: Chapter Questions
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Transcribed Image Text:Derry Corporation is expected to have an EBIT of $3,350,000 next year. Depreciation, the increase in net working capital, and capital
spending are expected to be $270,000, $175,000, and $275,000, respectively. All are expected to grow at 20 percent per year for
four years. The company currently has $22,000,000 in debt and 885,000 shares outstanding. At Year 5, you believe that the
company's sales will be $29,200,000 and the appropriate price-sales ratio is 2.7. The company's WACC is 9.1 percent and the tax rate
is 23 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.
× Answer is complete but not entirely correct.
Share price
$
48.68 X
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