Question

Ward Corp. is expected to have an EBIT of $2,200,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $171,000, $97,000, and $121,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $16,000,000 in debt and 810,000 shares outstanding. At Year 5, you believe that the company's sales will be $16,500,000 and the appropriate price?sales ratio is 2.6. The company’s WACC is 8.6 percent and the tax rate is 40 percent. What is the price per share of the company's stock?

Answer #1

Ward Corp. is expected to have an EBIT of $2,200,000 next year.
Depreciation, the increase in net working capital, and capital
spending are expected to be $171,000, $97,000, and $121,000,
respectively. All are expected to grow at 20 percent per year for
four years. The company currently has $16,000,000 in debt and
810,000 shares outstanding. After Year 5, the adjusted cash flow
from assets is expected to grow at 3.5 percent indefinitely. The
company’s WACC is 8.6 percent and the...

Ward Corp. is expected to have an EBIT of
$2,100,000 next year. Depreciation, the increase in net
working capital, and capital spending are expected to be
$169,000, $93,000, and $119,000,
respectively. All are expected to grow at 18
percent per year for four years. The company currently has
$15,000,000 in debt and 840,000
shares outstanding. At Year 5, you believe that the company's sales
will be $16,300,000 and the appropriate
price–sales ratio is 2.4. The company’s
WACC is 8.4 percent...

Ward Corp. is expected to have an EBIT of $2,350,000 next year.
Depreciation, the increase in net working capital, and capital
spending are expected to be $174,000, $103,000, and $124,000,
respectively. All are expected to grow at 17 percent per year for
four years. The company currently has $17,500,000 in debt and
840,000 shares outstanding. After Year 5, the adjusted cash flow
from assets is expected to grow at 3.5 percent indefinitely. The
company’s WACC is 8.9 percent and the...

Pearl Corp. is expected to have an EBIT of $3,400,000 next year.
Depreciation, the increase in net working capital, and capital
spending are expected to be $160,000, $155,000, and $195,000,
respectively. All are expected to grow at 18 percent per year for
four years. The company currently has $17,500,000 in debt and
1,350,000 shares outstanding. At Year 5, you believe that the
company's sales will be $27,030,000 and the appropriate price-sales
ratio is 2.6. The company’s WACC is 9.1 percent...

URGENT!!! 30 MINUTES LEFT!!! Pearl Corp. is expected to have an
EBIT of $2,400,000 next year. Depreciation, the increase in net
working capital, and capital spending are expected to be $160,000,
$105,000, and $145,000, respectively. All are expected to grow at
20 percent per year for four years. The company currently has
$12,500,000 in debt and 1,050,000 shares outstanding. At Year 5,
you believe that the company's sales will be $20,400,000 and the
appropriate price-sales ratio is 2.6. The company’s...

River Walk Tours is expected to have an EBIT of $184,000 next
year. Depreciation, the increase in net working capital, and
capital spending are expected to be $11,000, $1,500, and $13,000,
respectively. All are expected to grow at 6 percent per year for
three years. After Year 4, the adjusted cash flow from assets is
expected to grow at 2.5 percent indefinitely. The company's WACC is
9.2 percent and the tax rate is 21 percent. What is the terminal
value...

Franktown Motors is expected to have an EBIT of $2,200 next
year. Depreciation, the increase in net working capital, and
capital spending are expected to be $158, $92, and $114,
respectively. This yields a year 1 Free Cash Flow of $1,404. All
items are expected to grow at 15 percent per year until the end of
year 4. The firm currently has $12,098 in debt and 538 shares
outstanding. After year 4, the adjusted cash flow from assets is
expected...

URGENT!! 30 MINUTES LEFT!! You have looked at the current
financial statements for Reigle Homes, Co. The company has an EBIT
of $3,090,000 this year. Depreciation, the increase in net working
capital, and capital spending were $237,000, $102,000, and
$475,000, respectively. You expect that over the next five years,
EBIT will grow at 18 percent per year, depreciation and capital
spending will grow at 23 percent per year, and NWC will grow at 13
percent per year. The company has...

You have looked at the current financial statements for Reigle
Homes, Co. The company has an EBIT of $3,010,000 this year.
Depreciation, the increase in net working capital, and capital
spending were $233,000, $98,000, and $455,000, respectively. You
expect that over the next five years, EBIT will grow at 17 percent
per year, depreciation and capital spending will grow at 22 percent
per year, and NWC will grow at 12 percent per year. The company has
$16,700,000 in debt and...

You have looked at the current financial statements for Reigle
Homes, Co. The company has an EBIT of $3,010,000 this year.
Depreciation, the increase in net working capital, and capital
spending were $233,000, $98,000, and $455,000, respectively. You
expect that over the next five years, EBIT will grow at 17 percent
per year, depreciation and capital spending will grow at 22 percent
per year, and NWC will grow at 12 percent per year. The company has
$16,700,000 in debt and...

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