Estimate of the current stock price

Assignment Help Finance Basics
Reference no: EM132404524

Eberhart Manufacturing has projected sales of $146.4 million next year. Costs are expected to be $81.7 million and net investment is expected to be $15.7 million. Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely. There are 6.2 million shares of stock outstanding and investors require a return of 14 percent return on the company's stock. The corporate tax rate is 39 percent. (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

a. What is your estimate of the current stock price?

b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 10. What is your new estimate of the company's stock price?

Reference no: EM132404524

Questions Cloud

HI5019 Strategic Information Systems Assignment : HI5019 Strategic Information Systems Assignment Help and Solution, - Holmes Institute, Australia. Development and adoption of the accounting software packages
Spot rates and forward rates : Assume that the current yield curve for zero-coupon bonds (spot rates) is as follows:
What is the expected npv of the project today : If I abandon the project, what is the expected NPV of the project today? Enter in millions and round to two decimal places.
What about management of other areas of business : In the management of cash and marketable securities for a firm, why should the primary concern be for the safety and liquidity rather than maximization
Estimate of the current stock price : Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 10.
Benefit multinational companies : How does foreign currency futures contracts and foreign currency forwards contracts can be used to benefit Multinational Companies?
How can data analytics be used by an auditor to identify : How can data analytics be used by an auditor to identify risks in an organisation. The response paper should be in APA format, double spaced, hand-written.
What is meaning of cash flow statement and profit-loss : What is meaning of cash flow statement and profit/loss statement? prepared on accrual basis, explain both statement's purpose, objectives and importance.
What will you do and why : You are the accountant for a small food and beverage wholesaler. It is the last day of the current accounting month and business has been slow.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd