Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. rite bite enterprises sells toothpicks. gross reve

Rite Bite Enterprises sells toothpicks. Gross revenues last year were $10.7 million, and total costs...

90.2K

Verified Solution

Question

Finance

Rite Bite Enterprises sells toothpicks. Gross revenues last year were $10.7 million, and total costs were $5.4 million. Rite Bite has 1.8 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 5 percent per year. Rite Bite pays no income taxes. All earnings are paid out as dividends. (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

a.

If the appropriate discount rate is 15 percent and all cash flows are received at years end, what is the price per share of Rite Bite stock?

Price per share $

b.

Rite Bite has decided to produce toothbrushes. The project requires an immediate outlay of $19.0 million. In one year, another outlay of $8.0 million will be needed. The year after that, earnings will increase by $6.2 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken?

Price per share $

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

39 An electron and a photon possess the same de Broglie wavelength If E and...

Physics
Q

Suppose G is a connected cubic graph (regular of degree 3) and e is an edge...

Advance Math
Q

Consider the following reaction: NO(g) + NO3(g) --> 2NO2(g) which has an observed rate law of...

Chemistry
Q

What are the factors in determining your takeoff critical field length for a certain runway? If...

Mechanical Engineering
Q

Patio Iron makes wrought iron outdoor dining tables, chairs, and stools. Each table uses 8 feet...

Advance Math
Q

How do we know that alleles actually separate during gamete formation? A. Scientists are unsure...

Biology
Q

A ceiling fan of moment of inertia 30 kgm rotates about its own axis at...

Physics
Q

116 The position x of a particle varies with time t as 4 X 3...

Physics
Q

Sets A B and Care subsets of the universal set U These sets are defined...

Basic Math
Q

On January 2, 2015, Stoner Corporation granted stock options to key employees for the purchase...

Accounting
Q

Scenario: Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of...

Accounting
Q

Bluegill Company sells 9,900 units at $380 per unit. Fixed costs are $188,100, and operating...

Accounting