You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $5,150,000 this year. Depreciation, the increase in net working capital, and capital spending were $340,000, $172,000, and $590,000, respectively. You expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 15 per year, and NWC will grow at 20 per year. The company has $29,000,000 in debt and 495,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.35 percent, indefinitely. The company's WACC is 9.55 percent and the tax rate is 24 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 $ 117.88 x
You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $5,150,000 this year. Depreciation, the increase in net working capital, and capital spending were $340,000, $172,000, and $590,000, respectively. You expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 15 per year, and NWC will grow at 20 per year. The company has $29,000,000 in debt and 495,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.35 percent, indefinitely. The company's WACC is 9.55 percent and the tax rate is 24 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 $ 117.88 x
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 9P
Related questions
Question
![You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $5,150,000 this year.
Depreciation, the increase in net working capital, and capital spending were $340,000, $172,000, and $590,000, respectively. You
expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 15 per year,
and NWC will grow at 20 per year. The company has $29,000,000 in debt and 495,000 shares outstanding. After Year 5, the adjusted
cash flow from assets is expected to grow at 3.35 percent, indefinitely. The company's WACC is 9.55 percent and the tax rate is 24
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
S
117.88 x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F446781b2-2c33-42ba-9723-c3fb4d84a8f5%2F75b39fcd-bfad-4c19-a0da-56f2b3911f7f%2Ffn9jdj_processed.jpeg&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 $5,150,000 this year.
Depreciation, the increase in net working capital, and capital spending were $340,000, $172,000, and $590,000, respectively. You
expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 15 per year,
and NWC will grow at 20 per year. The company has $29,000,000 in debt and 495,000 shares outstanding. After Year 5, the adjusted
cash flow from assets is expected to grow at 3.35 percent, indefinitely. The company's WACC is 9.55 percent and the tax rate is 24
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
S
117.88 x
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT