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Pearl Corp. is expected to have an EBIT of $2,100,000 next year. Depreciation, the increase in...

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Pearl Corp. is expected to have an EBIT of $2,100,000 next year.Depreciation, the increase in net working capital, and capitalspending are expected to be $160,000, $90,000, and $130,000,respectively. All are expected to grow at 17 percent per year forfour years. The company currently has $11,000,000 in debt and900,000 shares outstanding. After Year 5, the adjusted cash flowfrom assets is expected to grow at 3.5 percent indefinitely. Thecompany’s WACC is 8.6 percent and the tax rate is 23 percent.

What is the price per share of the company's stock? (roundanswer to 2 decimal places)

Answer & Explanation Solved by verified expert
3.8 Ratings (338 Votes)
Expected FCF FCF1 EBIT 1 Tax Depreciation Increase in Net Working Capital Capital Spending Expected FCF FCF1 2100000 1 023 160000 90000 130000 Expected FCF FCF1    See Answer
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Pearl Corp. is expected to have an EBIT of $2,100,000 next year.Depreciation, the increase in net working capital, and capitalspending are expected to be $160,000, $90,000, and $130,000,respectively. All are expected to grow at 17 percent per year forfour years. The company currently has $11,000,000 in debt and900,000 shares outstanding. After Year 5, the adjusted cash flowfrom assets is expected to grow at 3.5 percent indefinitely. Thecompany’s WACC is 8.6 percent and the tax rate is 23 percent.What is the price per share of the company's stock? (roundanswer to 2 decimal places)

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