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Category > Business & Finance Posted 30 May 2017 My Price 7.00

Eberhart Manufacturing has projected sales of $147.2

Eberhart Manufacturing has projected sales of $147.2 million next year. Costs are expected to be $82.1 million, and net investment is expected to be $16.1 million. Each of these values is expected to grow at 16 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 8 percent, where it is expected to remain indefinitely. There are 6.6 million shares of stock outstanding and investors require a return of 15 percent on the companyAc€?cs stock. The corporate tax rate is 40 percent.

  

a.

What is your estimate of the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places (e.g., 32.16).)

  

  Share 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 companyAc€?cs stock price? (Do not round intermediate calculations and round your answer to 2 decimal places (e.g., 32.16).)

  

  Share price $

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Status NEW Posted 30 May 2017 04:05 PM My Price 7.00

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