Reference no: EM133060555

For this assignment option you will need to refer to the following documents:  ABC Plumbing Corp. and Income/Balance sheet. Using the various ratios and assumptions project the stock price for the case study company and new issues of stock based on the statements. Be sure to include the following:

1. Incorporate and update the information given in Table 1 to reflect the changes for the upcoming year
2. Prepare the income statement and balance sheet for next year based on these assumptions: (a) cash, fixed assets, payables and accruals will grow with sales; (b) the current composition of interestbearing debts, which includes short-term bank loans and long term bonds, will be maintained for next year; (c) a tax rate of 40%; (d) 10% interest rate on all interest-bearing debts; (e) 50 million common shares outstanding
3. The current market price of ABC's common stocks is at $23.05. If all assumptions are realized, what is your estimate for ABC's stock a year from now based on today's P/E ratio?
4. If the growth rate of ABC next year is only 6%, but all other assumptions are maintained, what will ABC's stock price be? If this growth rate turns out to be a better-than-expected rate of 12%, how much will this stock be worth a year from now based on this model?