Global Harmonic Control Systems (GHCS) forecasts its Revenues, to be $500 million in one year. The Revenue is expected to grow at 10 percent per year for the two years and then grow at 8 percent per year for the next two years, and 6 percent per year after that. All Expenses including depreciation are 60 percent of revenues. Net investment, including net working capital and capital spending less depreciation, is 10 percent of revenues. Since all costs are proportional to revenues, net cash flow (sometimes referred to as free cash flow) grows at the same rate as do revenues. GHCS is an all-equity firm with 12 million shares outstanding. A discount rate of 16 percent is appropriate for a firm of GHCS’s risk. Assume tax rate as 40%. Compute for the Price per share of Global Harmonic Control Systems (GHCS).
Global Harmonic
Net investment, including net working capital and capital spending less depreciation, is 10 percent of revenues.
Since all costs are proportional to revenues, net cash flow (sometimes referred to as
GHCS is an all-equity firm with 12 million shares outstanding. A discount rate of 16 percent is appropriate for a firm of GHCS’s risk. Assume tax rate as 40%.
Compute for the Price per share of Global Harmonic Control Systems (GHCS).
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