Assume that the cash is non-operating

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Ginger Ale had sales of $980 million in 2013. Suppose you expect its sales to grow at a 8% rate in 2014, but that this growth rate will stay at the long-run growth rate for the apparel industry of 5% from 2015. Based on Ginger's past profitability and investment needs, you expect EBIT to be 9% of sales. Net capital expenditure (=capital expenditure - depreciation) to be 8% of any increase in sales, and increases in networking capital requirements to be 10% of any increase in sales. The invested capital (=long-term debt + equity - cash) is expected to S450 million in 2015. If Ginger has $580 million in cash, the current market value of debt of $160 million, 30 million shares outstanding, a tax rate of 35%, and a weighted average cost of capital of 10%, what is your estimates of enterprise, firm and stock in early 2014 (=at the end of 2013)? Assume that the cash is non-operating.

Reference no: EM131185327

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