You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,150,000 this year. Depreciation, the increase in net working capital, and capital spending were $240,000, $105,000, and $490,000, respectively. You expect that over the next five years, EBIT will grow at 14 percent per year, depreciation and capital spending will grow at 19 percent per year, and NWC will grow at 9 percent per year. The company currently has $18.1 million in debt and 375,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The company's WACC is 7.8 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price
You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,150,000 this year. Depreciation, the increase in net working capital, and capital spending were $240,000, $105,000, and $490,000, respectively. You expect that over the next five years, EBIT will grow at 14 percent per year, depreciation and capital spending will grow at 19 percent per year, and NWC will grow at 9 percent per year. The company currently has $18.1 million in debt and 375,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The company's WACC is 7.8 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 9P
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Question
9
![You have looked at the current financial statements for J&R Homes, Company. The
company has an EBIT of $3,150,000 this year. Depreciation, the increase in net working
capital, and capital spending were $240,000, $105,000, and $490,000, respectively. You
expect that over the next five years, EBIT will grow at 14 percent per year, depreciation
and capital spending will grow at 19 percent per year, and NWC will grow at 9 percent
per year. The company currently has $18.1 million in debt and 375,000 shares
outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5
percent indefinitely. The company's WACC is 7.8 percent and the tax rate is 21
percent. What is the price per share of the company's stock? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
C
Share price](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3725bfa0-01fc-479c-907d-b501fa2ee67b%2F2a372ec4-495e-4cf6-9db5-e0fc40b0274f%2Ffnu0osa_processed.png&w=3840&q=75)
Transcribed Image Text:You have looked at the current financial statements for J&R Homes, Company. The
company has an EBIT of $3,150,000 this year. Depreciation, the increase in net working
capital, and capital spending were $240,000, $105,000, and $490,000, respectively. You
expect that over the next five years, EBIT will grow at 14 percent per year, depreciation
and capital spending will grow at 19 percent per year, and NWC will grow at 9 percent
per year. The company currently has $18.1 million in debt and 375,000 shares
outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.5
percent indefinitely. The company's WACC is 7.8 percent and the tax rate is 21
percent. What is the price per share of the company's stock? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
C
Share price
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