Derry Corporation is expected to have an EBIT of $2,200,000 next year. Increases in depreciation,...
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Derry Corporation is expected to have an EBIT of $2,200,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $95,000, and $135,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $11,500,000 in debt and 950,000 shares outstanding. At Year 5, you believe that the company's sales will be $17,490,000 and the appropriate price-sales ratio is 2.4. The companys WACC is 8.7 percent and the tax rate is 24 percent. What is the price per share of the company's stock?
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