What is the price per share of the company stock

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Reference no: EM133002134

Max Hype Inc. is expected to have an EBIT of $440,000.00 next year. Also next year, depreciation, the increase in net working capital, and capital spending are expected to be $37,500.00, $23,000.00, and $47,500.00, respectively. All of these variables are expected to grow at 7 percent per year until the end of year 5. The company currently has $120,000.00 in debt and 450,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 4 percent indefinitely. The company's WACC is 9 percent and its tax rate is 35 percent.

a) What is the price per share of the company's stock?

b) If the company's stock price is $14.01 on the stock market, is the company overvalued, undervalued or correctly priced on the stock market?

c) Would you buy the company's stock? Why or why not?

Reference no: EM133002134

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