ratio is 3.4. The company's WACC is 9.7 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. Share price
ratio is 3.4. The company's WACC is 9.7 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. 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
Problem 1PS
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:Derry Corporation is expected to have an EBIT of $3,100,000 next year. Depreciation, the increase in net working
capital, and capital spending are expected to be $245,000, $150,000, and $250,000, respectively. All are expected
to grow at 15 percent per year for four years. The company currently has $19,500,000 in debt and 860,000 shares
outstanding. At Year 5, you believe that the company's sales will be $28,700,000 and the appropriate price-sales
ratio is 3.4. The company's WACC is 9.7 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.
Share price
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