Derry Corporation is expected to have an EBIT of $3,200,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $255,000, $160,000, and $260,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $20,500,000 in debt and 870,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,900,000 and the appropriate price-sales ratio is 2.4. The company's WACC is 8.7 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 $3,200,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $255,000, $160,000, and $260,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $20,500,000 in debt and 870,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,900,000 and the appropriate price-sales ratio is 2.4. The company's WACC is 8.7 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
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 9P
Related questions
Question
None
![Derry Corporation is expected to have an EBIT of $3,200,000 next year. Depreciation, the increase in net working capital, and capital
spending are expected to be $255,000, $160,000, and $260,000, respectively. All are expected to grow at 17 percent per year for four
years. The company currently has $20,500,000 in debt and 870,000 shares outstanding. At Year 5, you believe that the company's
sales will be $28,900,000 and the appropriate price-sales ratio is 2.4. The company's WACC is 8.7 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7eeffc20-ab5f-4e51-a232-8de738c2feef%2F614b7e5b-8a51-4a8d-bf17-6046306c777a%2F5afz1yc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Derry Corporation is expected to have an EBIT of $3,200,000 next year. Depreciation, the increase in net working capital, and capital
spending are expected to be $255,000, $160,000, and $260,000, respectively. All are expected to grow at 17 percent per year for four
years. The company currently has $20,500,000 in debt and 870,000 shares outstanding. At Year 5, you believe that the company's
sales will be $28,900,000 and the appropriate price-sales ratio is 2.4. The company's WACC is 8.7 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
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.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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