Derry Corporation is expected to have an EBIT of $3,450,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $280,000, $185,000, and $285,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $23,000,000 in debt and 895,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.9 percent, indefinitely. The company's WACC is 9.3 percent and the tax rate is 25 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 $3,450,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $280,000, $185,000, and $285,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $23,000,000 in debt and 895,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.9 percent, indefinitely. The company's WACC is 9.3 percent and the tax rate is 25 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
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 $3,450,000 next year. Depreciation, the increase in net working capital, and capital
spending are expected to be $280,000, $185,000, and $285,000, respectively. All are expected to grow at 17 percent per year for four
years. The company currently has $23,000,000 in debt and 895,000 shares outstanding. After Year 5, the adjusted cash flow from
assets is expected to grow at 2.9 percent, indefinitely. The company's WACC is 9.3 percent and the tax rate is 25 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
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